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PHILIP AGEE 





CU DIARY 



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Inside Cover: 



Excerpted from a page-one pre-publication review in the Washington Post 
"Book World" 

When Victor Marchetti's The CIA and the Cult of Intelligence was published 
it contained intriguing blanks where material deemed too sensitive by the CIA 
had been. 

There are no blanks in Philip Agee's Inside the Company: CIA Diary. This 
densely detailed expose names every CIA officer, every agent, every operation 
that Agee encountered during 12 years with "The Company" in Ecuador, 
Uruguay, Mexico and Washington. 

Among CIA agents or [contacts] Agee lists high ranking political leaders of 
several Latin American countries, U.S. and Latin American labor leaders, ranking 
Community Party members, and scores of other politicians, high military and 
police officials and journalists. 

After a stint as an Air Force officer (for cover) and CIA training, Agee 
arrived in Quito, Ecuador in late 1960. During the glory years of the Alliance for 
Progress and the New Frontier, he fought the holy war against communism by 
bribing politicians and journalists, forging documents, tapping telephones, and 
reading other people's mail. 

But it was a faraway event which seems to have disturbed him more. Lyndon 
Johnson's invasion of the Dominican Republic in 1 965 was an overreaction Agee 
couldn't accept. In 1968, he resigned with the conviction that he had become a 
"servant of the capitalism I rejected" as a university student — "one of its secret 
policemen." 

Agee decided to write this reconstructed diary to tell everything he knew. He 
spent four years writing the book in Europe, making research trips and dodging 
the CIA. At one point he lived on money advanced by a woman he believes was 
working for the CIA and trying to gain his confidence. 

Until recently, former CIA Director Richard Helm's plea that "You've just got 
to trust us. We are honorable men" was enough. With the revelations of domestic 
spying, it no longer is. 

In this book Agee has provided the most complete description yet of what the 
CIA does abroad. In entry after numbing entry, U.S. foreign policy in Latin 
America is pictured as a web of deceit, hypocrisy and corruption. Now that we 



can no longer plead ignorance of the webs our spiders spin, will be continue to 
tolerate CIA activities abroad? — Patrick Breslin © The Washington Post 

Cover photograph by Dennis Rolfe shows a typewriter and bugged case 
planted on the author presumably by the CIA. 



Stonehill Publishing Company 
Distributed by George Braziller, Inc. 




Philip Agee, who was a CIA operations officer for twelve years, now lives in 
England. 



"More than an expose, a unique chronicle ... the most complete description 
yet of what the CIA does abroad. In entry after numbing entry, U.S. foreign 
policy is pictured as a web of deceit, hypocrisy and corruption." — The 
Washington Post 

"Unlike Victor Marchetti, who was so high in the CIA that many of his 
notions of what goes on at the operations level are downright absurd, Philip Agee 
was there. He has first-hand experience as a spy-handler ... as complete an 
account of spy work as is likely to be published anywhere ... presented with 
deadly accuracy."— Miles Copeland, former CIA agent, in The London Observer 

"The workings of the world's most powerful secret police force— the CIA— 
comes across as a frightening picture of corruption, pressure, assassination and 
conspiracy."— Evening News (London) 



Introduction 

This is a story of the twelve-year career of a CIA secret operations officer 
that ended in early 1969. It is an attempt to open another small window to the 
kinds of secret activities that the US government undertakes through the CIA in 
Third World countries in the name of US national security It includes the actual 
people and organizations involved, placed within the political, economic and 
social context in which the activities occurred. An attempt is also made to include 
my personal interpretation of what I was doing, and to show the effect of this 
work on my family life. My reasons for revealing these activities will be found in 
the text. No one, of course, can remember in detail all the events of a twelve-year 
period of his life. In order to write this book, I have spent most of the last four 
years in intensive research to reinforce my own recollections. 

The officers of a CIA station abroad work as a team, often in quite different 
activities and with a considerable number of indigenous agents and collaborators. 
I have tried to describe the overall team effort, not just my own role, because all 
the station's efforts relate td the same goals. 

The variety of operations that are undertaken simultaneously by a single 
officer and by the station team made an ordinary narrative presentation 
cumbersome. I have chosen a diary format (written, to be sure, in 1973 and 1974) 
in order to show the progressive development of different activities and to 
convey a sense of actuality. This method also has defects, requiring the reader to 
follow many different strands from one entry in the diary to another, but I believe 
it is the most effective method for showing what we did. 

In order to ease the problem of remembering who all the characters are, I 
have included a special appendix, Appendix 1, which has descriptions of 
individuals and organizations involved or connected with the Agency or its 
operations (see note to Appendix 1). The reader is directed to this appendix by 
the use of a double dagger, J in the text. It will be noted that many agents' names 
have been forgotten and that only cryptonyms (code names) can be given. Some 
of the original cryptonyms have also been forgotten, and in these cases I have 
composed new ones in order to refer to a real person by some name at least. 
Appendix 2 gives an alphabetical listing of all abbreviations used and an asterisk 
indicates those entries which appear in Appendix 1. 



INSIDE THE COMPANY: CIA DIARY 



Several of the operational activities that I describe could not be placed at the 
exact date they really happened, for lack of research materials, but they are 
placed as close as possible to the date they occurred with no loss or distortion of 
meaning. Similarly, several events have been shifted a day or two so that they 
could be included in diary entries just before or just after they actually occurred. 
In these cases the changes make no difference. 

When I joined the CIA I believed in the need for its existence. After twelve 
years with the agency I finally understood how much suffering it was causing, 
that millions of people all over the world had been killed or had had their lives 
destroyed by the CIA and the institutions it supports. I couldn't sit by and do 
nothing and so began work on this book. 

Even after recent revelations about the CIA it is still difficult for people to 
understand what a huge and sinister organization the CIA is. It is the biggest and 
most powerful secret service that has ever existed. I don't know how big the KGB 
is inside the Soviet Union, but its international operation is small compared with 
the CIA's. The CIA has 16,500 employees and an annual budget of $750,000,000. 
That does not include its mercenary armies or its commercial subsidiaries. Add 
them all together, the agency employs or subsidizes hundreds of thousands of 
people and spends billions every year. Its official budget is secret; it's concealed 
in those of other Federal agencies. Nobody tells the Congress what the CIA 
spends. By Jaw, the CIA is not accountable to Congress. 

In the past 25 years, the CIA has been involved in plots to overthrow 
governments in Iran, the Sudan, Syria, Guatemala, Ecuador, Guyana, Zaire and 
Ghana. In Greece, the CIA participated in bringing in the repressive regime of the 
colonels. In Chile, The Company spent millions to "destabilize" the Allende 
government and set up the military junta, which has since massacred tens of 
thousands of workers, students, liberals and leftists. In Indonesia in 1965, The 
Company was behind an even bloodier coup, the one that got rid of Sukarno and 
led to the slaughter of at least 500,000 and possibly 1,000,000 people. In the 
Dominican Republic the CIA arranged the assassination of the dictator Rafael 
Trujillo and later participated in the invasion that prevented the return to power 
of the liberal ex-president Juan Bosch. In Cuba, The Company paid for and 
directed the invasion that failed at the Bay of Pigs. Some time later the CIA was 
involved in attempts to assassinate Fidel Castro. It is difficult to believe, or 
comprehend, that the CIA could be involved in all these subversive activities all 
over the world. 



2 



INSIDE THE COMPANY: CIA DIARY 



The life of a CIA operations officer can be exciting, romantic. You belong to 
a special club: The Company. For most of my career with the CIA I felt that I was 
doing something worthwhile. There is not much time to think about the results of 
your actions and, if you try to do it well, the job of operations officer calls for 
dedication to the point of obsession. But it's a schizophrenic sort of situation. You 
have too many secrets, you can't relax with outsiders. Sometimes an operative 
uses several identities at once. If somebody asks you a simple question, "What 
did you do over the weekend?" your mind goes Click! Who does he think I am? 
What would the guy he thinks I am be doing over the weekend? You get so used 
to lying that after a while it's hard to remember what the truth is. 

When I joined the CIA I signed the secrecy agreement. With this book, 
articles, exposure on radio and television, I may have violated that agreement. I 
believe it is worse to stay silent, that the agreement itself was immoral. My 
experience with the CIA has mostly been with its overseas operations. I trust 
investigations now going on in Washington into CIA activities will also expose 
CIA internal involvement which is, I suspect, much greater than anybody outside 
the CIA knows or the National Security Council realizes. I believe a lot of 
sinister things will come out and that Americans may be in for some very severe 
shocks. 

In the New York Review of Books of 30 December 1971, Richard Helms, then 
CIA Director, was quoted from a rare address to the National Press Club. In 
justifying the CIA'S secret operations, he said: 'You've just got to trust us. We are 
honourable men.' I ask that these words be remembered while reading this book, 
together with the fact that CIA operations are undertaken on instructions from the 
President himself and are approved in very detailed form on various levels within 
the CIA, and often at the Under-Secretary level or higher, outside the Agency. 
Finally, I ask that it be kept in mind that the kinds of operations I describe, which 
occurred for the most part in Latin America, were typical of those undertaken in 
countries of the Far East, Near East and Africa. I would also suggest that they are 
continuing today. 

Revelations during the past year of the CIA'S "destabilization" program 
against the Allende government in Chile, its illegal domestic operations and its 
complicity in political assassinations or assassination attempts have finally 
precipitated a long-overdue debate. I hope this book will contribute to it. 

London, May 1975 



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INSIDE THE COMPANY: 

CIA DIARY 



Part One 



South Bend, Indiana April 1956 

Hundreds of companies come to the university to interview students for 
possible employment. I hadn't signed up for any interviews but I've just had my 
first, and probably only, job interview. To my surprise a man from the CIA came 
out from Washington to see me about going into a secret junior executive training 
programme. Virginia Pilgrim must have recommended me. I'd forgotten she 
mentioned a programme like this when she stayed with us in Tampa last year — 
said she would dearly love to see the son of her oldest friends come into the CIA. 
Somehow I have the impression she is one of the highest-ranking women in the 
CIA — worked on the Clark Task Force that investigated the CIA under the 
Hoover Commission. 

I told Gus, } the recruiter, that I had already been accepted for law study. He 
was surprised. Virginia didn't know my plans. He said the JOT (Junior Officer 
Trainee) Program consists of six to nine months, in some cases even a year, of 
increasingly specialized training on the graduate school level. After the course 
you begin CIA work on analysis, research, special studies and reports writing, 
administration or secret operations. He said he couldn't say much about the 
course or the work because it is all classified. 

Gus asked me about my military service situation and when I told him I 
would have to do it sooner or later he mentioned a possible combination. For 
JOT'S who haven't done military service the CIA arranges for them to take a 
special course in the Army or the Air Force, which is really controlled by the 
CIA. It takes about a year to get an officer's commission and then you have to 
serve a year on a military assignment. Then it's back to Washington for the JOT 
training programme and finally assignment to a job at CIA headquarters in 
Washington. According to his calculations it would take five or six years to be 
assigned overseas if I wanted to go into secret operations. Too long to wait before 
getting to the good part, I thought. 

Gus knew a lot about me: student government, academic honours and the 
rest. I said that what I liked best was being Chairman of the Washington's 
Birthday Exercises in February when we gave the Patriotism Award to General 
Curtis Lemay. I told Gus that the Exercises are the most important expression of 
the 'country' part of the Notre Dame motto ('For God, Country, and Notre Dame 
'). He said I should keep the CIA in mind if I changed my plans. I would consider 



INSIDE THE COMPANY: CIA DIARY 



the CIA if the military combination worked but Gus emphasized that they only 
want people prepared for a career in the CIA. That leaves me out. 

I suppose the CIA works closely with General Lemay and his Strategic Air 
Command. This is the most important part of the speech he gave at the Exercises: 

Our patriotism must be intelligent patriotism. It has to go deeper than blind 
nationalism or shallow emotional patriotic fervour. We must continually study 
and understand the shifting tides of our world environment. Out of this 
understanding we must arrive at sound moral conclusions. And we must see to it 
that these conclusions are reflected in our public policies .... If we maintain our 
faith in God, our love of freedom, and superior global air power, I think we can 
look to the future with confidence. 

Tampa, Florida June 1956 

It's a strange feeling being back in Florida for the summer with no plans to 
return to the cold north in the fall. The miserable weather and the long distance 
from home and all the other negative aspects of studying at Notre Dame seemed 
to fade away during Commencement Week-end. 

No more bed check or lights out at midnight. No more compulsory mass 
attendance and evening curfew. No more Religious Bulletin to make you feel 
guilty if you didn't attend a novena, benediction or rosary service. And no more 
fear of expulsion for driving a car in South Bend. The end has come too, I hope, 
to the loneliness and frustration of living in an all-male institution isolated from 
female company. 

What will it be like to live without the religion and discipline of the 
university? It may have been hard but they were teaching us how to live the 
virtuous life of a good Catholic. Even so, I still have this constant fear that after 
all I might die by accident with a mortal sin on my soul. Eternity in hell is a 
worry I can't seem to shake off. But the main thing is to keep on trying — not to 
give up. After having to take all those courses on religion the only person to 
blame, if I really don't make it, will be me. It is the discipline and religion that 
makes Notre-Dame men different, and after four years of training I ought to be 
able to do better. 

Admiral Arleigh Burke, Chief of Naval Operations, discussed this in his 
speech at the graduation ceremony. He really impressed me: 



4 



INSIDE THE COMPANY: CIA DIARY 



Notre-Dame symbolizes many virtues. It blends the virtues of religion and 
patriotism — service to God, service to country. Notre-Dame stands for faith — 
faith in self and faith in country .... Self discipline and determination and fighting 
spirit are an integral part of the curriculum ... We are living in a great country 
where there is equality of opportunity, where justice is a reality... We are a 
generous nation.... We will never wage a war of aggression.... We are a strong 
nation.... We have strong allies.... But greater than all this strength is the strength 
of our moral principles.... Our nation is the symbol of freedom, of justice and 
opportunity, regardless of flag or political beliefs .... Communism has been, and 
still is, a prison for the millions who are denied the opportunity to learn 
responsibility — who are compelled to let the few do the thinking for the many 
who will do the labor .... Should we relax our efforts, either spiritual or physical, 
we would find our ship without a rudder; we would find our strength not 
sufficient to cope with the strong adverse winds which at some time will confront 
us. It takes a man with strength and a stout heart to steer in a gale. 

Admiral Burke writes a great speech — couldn't have been more accurate or 
more inspiring. At Notre Dame we learned how one's responsibilities extend 
beyond oneself to family, community and nation, and that respect for authority is 
the virtue of a respectable citizen. 

I will be driving a truck this summer to earn money for law school in the fall. 

Tampa, Florida December 1956 

Studying law at the University of Florida was a mistake. I didn't feel I 
belonged — I wasn't comfortable — in the fraternity whirl and the' hail fellow' 
routine. But I'm not an ascetic either. I suppose it was the lack of a sense of 
purpose or maybe I couldn't adjust to secular learning after four years of Jesuits 
and four at Notre Dame. At least I did realize it, and only stayed three months. 

I checked with the draft board and they said I have about six months before 
I'll be called up. It's a sad prospect, two years wasted as a private, washing dishes 
and peeling potatoes. For a few months anyway I'll live with my parents in 
Florida and try to save some money. A draftee only makes about eighty dollars a 
month and that's hardly enough for booze and cigarettes. 

The problem is what to do about the business. My father and grandfather are 
just starting a big expansion and they're counting on me to take my place with 
them. I know I'll make a lot of money but I can't get enthusiastic about it. Why 



5 



INSIDE THE COMPANY: CIA DIARY 



the reluctance to go into a family business? When I switched to philosophy 
studies after a year of business administration at Notre Dame I thought I was 
doing it for the sake of a higher form of education. Like so many others I could 
learn to run a business once I got into it. Well now I'm in it and I feel the same as 
when I rejected business administration for philosophy. I wish I could speak to 
my father or grandfather about it but it would look as if I think I'm too good for 
something they've dedicated their lives to. 

No hasty decisions. I've got six months to work with them and then two years 
in the Army. 

Tampa, Florida February 1957 

There has got to be a way to avoid two lost years in the Army. I've written to 
the CIA, reminding them of my meeting with Gus, and asking to be reconsidered. 
I've received application forms, returned them, advised Virginia Pilgrim by 
telephone, and now have to wait. Virginia said her friends in the personnel 
department would process my application as fast as possible because of the 
problem of the draft but it looks as if I may be too late. She said the security 
clearance takes about six months so the draft will probably win. 

Gus said the JOT programme is strictly for people who want to make the 
CIA a career and I've been wondering about this. No way to know until I learn 
more about what CIA work is like, but I really am interested in politics and 
international relations. And the more I live here the less enthusiastic I get for a 
lifetime in the family business. 

We'll see what kind of alternative the CIA can provide. It will mean three 
years' military duty instead of two if they take me, but I'll be an officer — more 
pay, better work (especially at the CIA), and time to decide. 

Washington DC April 1957 

I've been called to Washington for an interview with the JOT office which is 
in Quarters Eye near the Potomac River. I waited in a reception room until a 
secretary came for me, filled out a visitor's pass form giving name, address and 
purpose of visit, and the receptionist added the hour and stamped in large letters 
MUST BE ACCOMPANIED. Then she gave me a plastic clip-on badge which I 



6 



INSIDE THE COMPANY: CIA DIARY 



had to wear at all times. The secretary signed as responsible for me and I 
followed her to the JOT office. 

The man who interviewed me is named Jim Ferguson. J We spent about a 
half-hour discussing Notre Dame, the family business and my interest in a career 
in foreign affairs. I remembered the conversation with Gus and emphasized that 
while I am interested in a CIA career I know so little about the Agency that my 
reasons are necessarily restricted to an interest in foreign affairs. He said that 
they had arranged a series of tests and interviews with officers in charge of the 
JOT programme, including Dr Eccles, J the Program Director. If the testing and 
interviews go well a complete security background investigation will be made: 
which could take about six months. But in my case, with the problem of the draft, 
they could ask for priority action and hope for the best. 

The secretary gave me a piece of plain white paper with the building names, 
offices and times I was to report for the testing - it would take three days in all. 
She explained that at each building I would have to report to the receptionist, 
who would call the office where I had the appointment for someone to come and 
sign me in. She also reminded me to wear the visitor's badge at all times in the 
buildings and to return it with the pink visitor's pass on leaving. I would use the 
shuttle, an exclusive Agency bus, to get around the different buildings. 

During that first visit to the JOT office, I immediately sensed the fraternal 
identification among the CI A people. I suppose it was partly because they used a 
special 'inside' language. No one spoke of 'CIA', 'Central Intelligence Agency', or 
even 'The Agency'. Every reference to the Agency used the word 'company'. 

My first appointment was at the North Building with the Medical Staff and 
after that I alternated between those people and the office called ;Assessment and 
Evaluation' in the Recreation and Services Building on Ohio Drive. Although it 
seemed that the Medical Staff were looking for physical and mental health, and 
that 'A and E' were looking for the special qualities needed in an intelligence 
operative, there seemed to be little distinction between them. It was exhausting: 
endless hours filling in answer sheets to vocational, aptitude and personality 
tests. I've read of the elaborate testing procedures developed by the Office of 
Strategic Services during World War II and now I see it's still going on. Stanford, 
Minnesota, Strong, Wechsler, Guilford, Kudor, Rorschach — some tests are 
administered and others just written. The worst was the interview with the 
psychiatrist at the Medical Staff — he really bugged me. 



7 



INSIDE THE COMPANY: CIA DIARY 



I finally finished about noon on the afternoon of the third day, and I had a 
couple of hours before I had to report back to the JOT office so I decided to do 
some sightseeing. I grabbed a sandwich at a blind stand and then took the shuttle 
to the Executive Office Building. (Those blind stands — sandwich bars operated 
by blind people — are in practically every building. I guess it's a good thing for 
the blind people to have that work, and the company can let them in the buildings 
because they can't read secret papers. Everybody wins.) 

Then out to the Washington Monument. Looking out from the top of the 
Monument at the buildings where our national life is guided, where our integrity 
in the face of grave external threat is defended, and where the plurality of 
conflicting domestic interests finds harmony, I admitted to myself that 
participation in government is my long-range goal. It won't matter if I live below 
my parents' material level or even without fixed roots in a community. Working 
in the Central Intelligence Agency, preferably overseas, with intimate knowledge 
of the functioning and decisions of friendly and hostile governments will provide 
a forever stimulating and exciting atmosphere as well as an intellectually 
challenging occupation. I'll be a warrior against communist subversive erosion of 
freedom and personal liberties around the world — a patriot dedicated to the 
preservation of my country and our way of life. 

I left the Monument through the circle of American flags and walked back to 
Quarters Eye feeling more confident and self-possessed than at any time since 
arriving. After the usual sign-in, pink slip, badge and escort procedure, I was 
received again by Ferguson J who told me the first reports on the testing looked 
pretty good. While waiting to see Dr Eccles, Ferguson said he would brief me on 
the military programme they had in mind. First, however, he warned me that the 
programme was classified and not to be discussed with anyone outside the 
Agency. At his request I signed a statement acknowledging that what I learned 
was information relating to national security and promising that I would not 
reveal it. 

Ferguson outlined the military programme. When the security clearance is 
completed I will be called back to Washington where I will enlist in the Air 
Force. After three months' basic training I will be assigned to the first available 
class at Officer Candidate School — all at Lackland Air Force Base in San 
Antonio, Texas. Following OCS I will be assigned to an Air Force base 
somewhere in the US, and, with luck, my duties will be in air intelligence. 
Ferguson explained that the company doesn't control assignments made by the 



8 



INSIDE THE COMPANY: CIA DIARY 



Air Force after completion of OCS, but more and more of the company military 
trainees are getting intelligence assignments during the obligatory year of strictly 
military duties. After a year at the Air Force base I will be transferred to an Air 
Force unit in Washington that is actually a company cover unit, and my formal 
company training will begin. 

The secretary appeared and said Dr Eccles would see me. I still had to get 
past him and I had primed myself for this meeting. Virginia had told me that Dr 
Eccles's approval was necessary for acceptance. He turned out to be a bushy- 
browed, bespectacled man of about sixty with an unavoidable authoritative glare. 
He asked me why I wanted to be an intelligence officer and when I replied that 
foreign affairs is one of my main interests he tried to make me uncomfortable. He 
said that foreign policy is for diplomats; intelligence officers only collect 
information and pass it to others for policymaking. He added that maybe I should 
try the State Department. I said maybe I should but that I don't know enough 
about the Agency yet to decide, adding that I'd like to come into the programme 
to see. He then gave me a little lecture; they don't want men who will quit the 
CIA as soon as they finish military service. They want only men who will be 
career intelligence officers. After that he turned into a kind old grandfather and 
said we'd see how the security clearance turned out. Heshook my hand and said 
they'd like to have me. Made it! I'm in — but it seems too easy. 

Back in Ferguson's office where he continued to describe the programme. At 
no time will I be connected openly with the company, and I am to tell no one that 
I am being considered by it for employment. Assuming the security investigation 
is favourable, they will arrange for me to be hired as a civilian by the Department 
of the Air Force, actually by an Air Force cover unit of the company, when I am 
called back to Washington. A few weeks later I will enlist in the Air Force and be 
sent to Lackland for basic training. While in the Air Force I will be treated just 
like any other enlistee and no one will know of my company connection. 
Keeping the secret will be part of my training — learning to live my cover. A 
violation of cover could lead to dismissal from the programme. My assignments 
afterwards will also be determined in part by how well I have concealed my 
company affiliation. Back in Florida I must keep the plan secret, but notify 
Ferguson if I receive any orders from the draft board. 

I'm beginning to feel a kind of satisfaction in having a secret and of being on 
the threshold of an exclusive club with a very select membership. I am going to 
be my own kind of snob. Inside the Agency I'll be a real and honest person. To 



9 



INSIDE THE COMPANY: CIA DIARY 



everyone outside I'll have a secret lie about who and what I am. My secret life 
has begun. 

Washington DC July 1957 

Salvation! The security clearance ended before the call-up came, and I drove 
to Washington loaded with books, hi-fi, records and tennis gear. Georgetown is 
the 'in' area where a CIA officer trainee feels most comfortable, so I've moved in 
with some former Notre Dame classmates who are doing graduate study at 
Georgetown University. We're living in a restored Federalist house on Cherry Hill 
Lane, a narrow brick street between M Street and the Chesapeake and Ohio 
Canal. I have that feeling of being just the right person in just the right place. 
These friends don't know I'm going into the CIA so this will be my first real test 
of living a cover. 

At the JOT office Ferguson told me whom I am working for. My 'employer' 
is the Department of the Air Force, Headquarters Command, Research and 
Analysis Group, Boiling Air Force Base, Washington. He gave me the names of 
my commander, an Air Force colonel, and of my immediate supervisor, a major, 
both of whom are fictitious. I have to memorize all this so I can reel it off to 
people I meet. My Boiling Air Force Base telephone number rings in the Agency 
Central Cover Division where they have some male telephone operators who roll 
dice each morning to see who will play the colonel and who will play the major. 

I signed another secrecy agreement — the wording makes it permanent, 
eternal and universal about everything I learn in the company - and Ferguson sent 
me over to my first assignment at 1016 16th Street. I rushed over but discovered 
nobody was expecting me. Finally I was called up to the fourth floor and 
welcomed to the Personnel Pool. All we do is fold maps and have crossword 
puzzle competitions. 

The Personnel Pool is a holding area for all prospective employees who lack 
the final nihil obstat for the security clearance — we're all waiting for the same 
happy event: the polygraph or lie detector. We're about thirty people. Some of 
them have been in the pool for over a month and they're the rumour-mongers. It 
seems that the polygraph, or 'technical interview' as it's officially called, has been 
a real trauma for some. We have been warned that nobody talks about the 'poly' 
and that makes the rum ours all the more mysterious. It seems that the main part 
of the apparatus crosses the breasts, which makes some of the girls nervous, and 



10 



INSIDE THE COMPANY: CIA DIARY 



the main questioning is on homosexual experience, which makes some of the 
boys nervous. There are stories of nervous breakdowns, ambulances and even 
suicide. There's no doubt, however, what's going to happen when you get advised 
of an appointment at Building 13. 

Washington DC July 1957 

After two weeks of folding maps my turn finally came. How stupid to think I 
could beat the machine! Yesterday I was 'polyed' and now I'm back at the 
Personnel Pool but on a different floor and with people who've already taken the 
test. We're kept away from those who haven't taken it so they won't know much 
about it. The interrogators don't tell you right away about the results of the test — 
they make you wait. Nothing but gloom here. 

The shuttle doesn't stop at Building 1 3 so I had to ask the driver to leave me 
as near as possible. When he acknowledged Building 13 in a loud voice (on 
purpose, I'm sure) the cold, knowing eyes of the other passengers focused right 
on me and I felt like a leper. They knew I was about to make a secret, intimate 
confession. Bad joke. 

At 23rd Street and Constitution Avenue, the driver announced Building 13 
and pointed me towards a complex of temporary buildings, barracks style, 
beyond a parking lot towards the Watergate. The buildings are surrounded by 
high chain-link fences topped by several strands of barbed-wire tilting towards 
the outside. All the windows, have the same type of chain-link mesh and every 
third or fourth window has an air-conditioner. None of them are open and the 
buildings look impenetrable. 

I made my way along the fence and the first building I noticed after getting to 
a gate was one with a discreet 13 near the entrance. After a short wait with the 
receptionist I was greeted by a man about thirty-five — clean-cut, clean-shaved 
and clear-eyed. He took me a short distance down a hallway, opened a door, and 
we passed into a small room with acoustical tile covering the walls and ceiling. 
There was a standard government leather easy chair that backed up to a desk-like 
construction with a built-in apparatus of dials, graph paper and odd, narrow, 
metal pens. In an effort to keep me from more than a swift glance at the machine, 
he conducted me immediately to a sitting position in the easy chair. From behind 
the desk he brought a straight chair and sat down in front of me. 



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The interrogator announced that I had reached the final phase of the security 
clearance procedure necessary for access to Top Secret material and, of course, 
for employment with the company He assured me that all employees of the 
company, even Mr. Dulles, submit to the polygraph — not just once when they're 
hired, but periodically throughout their careers. Then he asked me to sign a 
prepared statement acknowledging that I was submitting to the test of my own 
volition and that I would hold no claim against any person or the company 
afterwards no matter what the outcome. I eagerly signed this quit claim — in 
advance — and also another secrecy agreement, pledging myself to speak to no 
one of the questions or other details of the interview. 

We then reviewed the questions, all of which were to be answered simply 
'yes' or 'no'. Is my name Philip Burnett Franklin Agee? Was I born on 19 January 
1935? Have I ever used any other name or identity? Have I filled out my job 
application form honestly? Have I ever been a member of any of the subversive 
organizations on the Attorney-General's list? Have I ever been a communist or 
belonged to any communist organization? Have I ever been in a foreign country? 
In a communist country? Have I known any officials of a foreign government? 
Of a communist government? Have I ever known an intelligence officer of a 
foreign country? Have I ever worked for a foreign government? For a foreign 
intelligence service? For a communist intelligence service? Have I been asked by 
anyone to obtain employment with the CIA? Have I told anyone outside the CIA 
of my attempt to obtain employment? Have I ever engaged in homosexual 
activities? Have I ever taken drugs? Have I taken tranquillizers today? 

The pre-test interview lasted over an hour as the interrogator explored each 
question in depth, noting all names, dates, places, and finally rephrasing the 
question to include an 'other than' or 'except for' clause that would qualify the 
question and still allow for a 'yes' or 'no' answer. During this discussion the 
interrogator explained to me that the lie detector is used exclusively in the 
company by the Office of Security which is responsible for protecting the 
company against employment of security risks or against penetration by hostile 
intelligence services. He also assured me that everything I said during the 
interview is strictly confidential and will be restricted to my Office of Security 
File which is available only to security officers of the same office. I didn't have 
the courage to ask how many security officers that meant, but as I wondered I felt 
a creeping discomfort that behind one of those thousands of holes in the 
acoustical tiles there was a microphone secretly recording our conversation. I 



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also began to wonder if I was having incipient symptoms of the paranoia that 
some people say is the personality trait sine qua non of the effective intelligence 
officer. 

Now we were ready for the test. The polygraph consists of three apparatuses 
which are attached to the body of the person being interrogated and which 
connect by tubes or cords to the desk ensemble. Each apparatus measures 
physiological changes, marked on moving graph paper by three pens. There are, 
accordingly, a blood pressure cuff that can be attached either to the arm or leg, a 
corrugated rubber tube about two inches in diameter that is placed snugly around 
the chest and fastened in the back, and a hand-held device with electrodes that is 
secured against the palm by springs that stretch across the back of the hand. The 
cuff measures changes in pulse and blood pressure, the chest-tube measures 
changes in breathing rhythm, and the hand instrument measures changes in 
perspiration. I was hooked into the machine, told to look straight ahead at the 
wall, to be very still, and to answer only 'yes' or 'no' to each question. The 
interrogator was behind me at the desk ensemble facing the back of my head. He 
asked the questions to my back and I answered to the wall in front. 

During the pre-test interview I had given my interrogator several half-truths, 
partly because I simply resisted his invasion of my life, and partly because I was 
curious about the effectiveness of the machine. Foolish child! As the cuff inflated 
I was conscious of increased pulse and my hands began to sweat profusely. 
Anticipating the questions that I should react on, I started to count the holes in 
the tiles in order to distract myself from the test. The interrogator passed very 
slowly from one question to another, pausing between each question. I answered 
'yes' or 'no' and at the end he slipped in an unannounced question: had I answered 
all the questions truthfully? Dirty trick. I said 'yes' and after a few seconds the 
cuff deflated. 

I heard a shuffling of paper and he reviewed the chart as I remained still. He 
told me I could move a little but that if I was not particularly uncomfortable he 
would like me to remain seated and hooked up. Fine. He stayed behind the desk 
behind my chair behind my back and started asking me what I was thinking about 
when I answered the question on whether anyone had asked me to obtain 
employment with the CIA. Nothing in particular. He insisted but I couldn't come 
up with an answer other than that I was thinking that indeed no one had asked 
me. Discussion. Then he asked me what I was thinking when I answered the 
question about telling anyone outside the C (A of my attempt to obtain 



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employment. Nothing in particular. Discussion. Then the question on homosexual 
experience. Then drugs. As we passed from question to question he insisted with 
increasing intensity that I try to remember what I was thinking when I answered 
the question, emphasizing that my cooperation is essential for a successful 
testing. Successful? I wondered if successful for him is the same as successful for 
me. Obviously not. I would stick to my half-truths. They weren't lies anyway, and 
besides I have heard that you can beat the machine if you stay consistent. 

We started again. Up went the blood pressure cuff and out came the 
questions. In went the 'yes's' and 'no's' and up and down went the faintly 
scratching pens. I fiercely counted the holes in the tiles and was gaining in 
confidence. Down went the cuff followed by more post-test discussion. This time 
I was' having difficulty' on two more questions. I repeated and insisted that I was 
being truthful and that when answering each question I had been thinking only of 
the question and of its only possible truthful answer — which I gave. 

The interrogator said we would go through the questions again and that I 
hadn't done too well on the first two runs, adding that there is no way for me to 
be hired without successfully passing the test. Was there anything I wanted to say 
or clarify? No. I was being truthful and maybe something was wrong with the 
machine. That hurt. His tone cooled, the cuff inflated and we did another test. At 
the end he said I was obviously having trouble. With an air of finality he 
unhooked me from the machine. 

At that moment I got scared and feared I wouldn't be hired. As I was about to 
confess he said he would leave me alone to think things over for five or ten 
minutes. He closed a lid to the desk ensemble and left the room taking the charts 
with him. I stood up and looked at my watch which I had been asked to remove 
and place on the desk behind me. I had been at Building 13 for over two hours. 
The interrogator was gone for at least twenty minutes. During that time I decided 
to tell the full truth. Why risk losing the job out of silly pride or the illusion that I 
could beat the machine? But as the door opened and my interrgator rejoined me I 
suddenly became frightened of admitting deception. I decided not to change any 
answer. Besides, in the Personnel Pool I had heard that some people who have 
difficulty are called back for a second or third time for the polygraph. I would 
have another day if I really failed this time. 

We passed through the questions two more times. After both tests the 
interrogator insisted that I was having trouble on the same questions and I 
insisted that I was answering truthfully no matter what difficulty I was having. At 



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last he said that would be all. I asked if I had passed and he answered sceptically 
that he didn't know, that I would be advised after the Security Office had 
reviewed my case and the charts. He was very pessimistic, and as I was leaving I 
feared that they might not even call me back for another test. I was exhausted — 
went home, had a couple of drinks and slept for twelve hours. 

When I called Virginia in the morning and told her I thought I'd failed the 
test, she said not to worry, that they always make people think they've failed. She 
thinks it's to avoid disappointment and fewer problems with those who really 
aren't going to be hired. Virginia's news is temporary relief, but the wait is 
agonizing. No more arrogant jokes about the polygraph in the Pool now — and 
nobody's reckless enough to discuss his interrogation with anyone else. 
Everybody's just sitting. 

Washington DC July 1957 

I couldn't stand it any longer. After three days' waiting, I called Ferguson to 
admit I was lying and to volunteer to take the test again. Before I could say 
anything he said he had some good news and to come over to his office. The tone 
of his voice gave infinite relief — I knew I had passed. 

At the JOT office Ferguson told me he has started my processing for 
enlistment in the Air Force but it will take three or four weeks. Meanwhile he 
wants me to take a training course on international communism and, if there is 
time, a course on the bureaucratic organization of the company. These aren't the 
courses I'll be taking when I get back but they'll be useful, he thinks, even if 
they're pretty elementary. He also had the secretary arrange to get me a badge — I 
can come and go now without being signed in - and he made an appointment for 
me with Colonel Baird, J the Director of Training. 

I missed the meeting with Baird and after being chastised at the JOT office I 
finally saw him in his office at T-3 (another of the Potomac Park temporaries). I 
hadn't realized how important Colonel Baird is — he set up the JOT programme in 
1950 under direct supervision of General Walter Bedell Smith who was then 
Agency Director. With Princeton, Oxford, and the headmastership of a boys' 
school behind him, Baird is considerably more formidable than his military rank. 
He oozes firm leadership, old hand super-confidence and a Dunhill special blend 
for special pipes. He's tall, greying, very tanned and very handsome — irresistible 
to the ladies, I'm sure. He didn't say much — just to work hard at OCS. 



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Ferguson and everyone else, since the polygraph, have greeted me with' 
welcome aboard', as if these words are the official greeting for newcomers. 
Maybe there are a lot of ex-Navy men in the CIA — or maybe these people like to 
think they're on a ship because of the isolation imposed by cover and security. 

Baltimore, Maryland August 1957 

The two weeks studying communism and two weeks reading organizational 
charts of the headquarters' bureaucracy leave me happy to leave Washington. 

Yesterday morning Ferguson gave me my final briefing on joining the Air 
Force. Arrangements had been made, he said, at the main Air Force recruiting 
office in Washington for me to be taken into the Air Force on a normal five-year 
enlistment, which was the standard procedure for all Air Force enlistees. 
However, after basic training I will receive a special appointment by the 
Secretary of the Air Force to the first OCS class. I would have to be prepared to 
cover this appointment because we JOT'S are the only exceptions to the Air 
Force regulation that five years' service is needed before an enlisted man can 
even apply for OCS. Ferguson said I can refer to a little known (so little known, 
in fact, that it doesn't exist) Air Force programme for college graduates if I am 
pressed, but I can probably avoid giving explanations. He warned me, however, 
not to tell anyone that I am going to OCS until the assignment is actually 
announced to me at Lackland Air Force Base. 

I signed another secrecy agreement and Ferguson said I'll have to take the 
polygraph again when I get back in two years' time. Then I took the bus to the 
recruiting office carrying only an overnight bag with some toilet articles and a 
change of underwear and socks. 

I told the paunchy, weather-beaten recruiting sergeant my name as pleasantly 
as I could. He answered 'yeah' and when I noticed it was a question I wondered 
whether to say' here I am' or T want to enlist'. I decided to say both, trying to 
sound unrehearsed, and I added that I thought I was expected. The recruiting 
sergeant understandably looked back as if he thought I thought the Air Force was 
about to be saved. 

He gave me some forms to fill in and asked if I wanted to go in thirty, sixty 
or ninety days. I said cheerfully that I was ready to go right then, which made his 
eyes narrow and his mouth screw up into that' another case' expression. He 
motioned me over to a table across the room where I filled in the forms, 



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wondering all the while whether the sergeant was really attached to the JOT 
office and was testing my ability to maintain the cover story I returned the forms 
which he looked over and then he disappeared into a back office. 

After a few minutes he returned with another recruiting sergeant and both 
expressed considerable scepticism. We spent the next half-hour discussing why a 
philosophy graduate wanted to enlist for five years in the Air Force in order to 
learn to be a radar mechanic. Finally I admitted that it was indeed kind of strange 
and I accepted their invitation to think it over for a few days. I carried my little 
bag of essentials out of the recruiting office wishing I could find somewhere to 
hide. 

From a telephone booth I called Ferguson to advise that apparently the Air 
Force didn't want me — not that day anyway. He gulped and stammered for me to 
call him back in two hours. I wondered what clown had missed his cue while at 
the same time I dreaded facing the recruiting sergeant again. When I called back, 
Ferguson told me to go back to the recruiting office, that everything was all right 
now. When I pressed him for an explanation his voice turned cold and he warned 
me not to discuss classified matters over the telephone. Back in the recruiting 
office there was a new sergeant who' simply gave me a ticket for the bus to 
Baltimore for the medical examination and swearing in. 

At Fort Holabird they took me. Tonight I fly to San Antonio to begin two 
years away from CIA headquarters — Ferguson said I must consider this time as 
part of the JOT training, a time for 'maturing', I think he said. 

San Antonio, Texas Christmas 1957 

Tony and I had Christmas dinner at the dining-hall, the low point of a 
miserable day. Next week, New Year's Eve to be exact, we report to OCS. We're 
going to live it up meanwhile except neither of us has any money. 

There are only three of us going into this class; Tony, who's from Princeton; 
Bob, from Williams, and me. A couple of nights ago we met in a hotel downtown 
with the six JOT'S who started OCS in the last class. They are going to be upper 
classmen now — the course is three months lower and three months upper class — 
which means they will be harassing us. That's normal and necessary for cover. 

For the meeting we took security precautions as Ferguson instructed when he 
came to see us in October. No one can take any chances by a show of prior 
knowledge or special camaraderie between the triple Xer's. Those three X's 



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which are in brackets after our names on all our documents, are the Air Force's 
way of keeping track of CIA trainees. 

The guys from the upper class told us not to be surprised if they put the heat 
on us — they have to because of the resentment on the part of the others in the 
class who had to work years to get into OCS. It seems these non-corns aren't 
happy about our miniscule bunch (there are about 300 cadets altogether in OCS) 
being specially privileged by entering straight from basic training. I suppose we'll 
run into the same. 

San Antonio, Texas June 1958 

In a few days I'll be a Second Lieutenant unless the OCS Commandant 
decides my insult was too much to take. A couple of weeks ago he called me in to 
tell me I was going to be eligible for a regular commission instead of a reserve 
commission. Only the top six OCS graduates get regular commissions and for an 
aspiring career officer it's the end of the rainbow — you practically can't get 
discharged. The Commandant also said it looked as if I might graduate first in the 
class. I made a panic call to Ferguson and he told me to turn the regular 
commission down. I told the Commandant who said it might not help our cover 
situation (he's the only officer on the OCS staff who knows of our CIA 
sponsorship), if the top graduate refuses a regular commission. I got the hint and 
am holding back an academic paper which should drop me a notch or two. But 
the Commandant took my refusal of the regular commission like a slap in the 
face. Guess this hasn't come up before. 

My orders after commissioning are for transfer to the Tactical Air Command. 
It's too good to believe: assignment as intelligence officer to a fighter squadron at 
a base just outside Los Angeles. 

Victorville, California June 1959 

My orders finally came for transfer back to Washington — to the company 
bogus unit, I mean. It's been a marvellous year, driving up and down those 
motorways to Mexico, San Francisco, Yosemite, Monterey. I finally got busy 
training the pilots in targeting because we have the new F-104 and nuclear targets 
in China. I've also done some training in evasion and escape because some of the 
targets are one-way ditch missions. The only big mistake was volunteering for 
the Survival School at Reno, Nevada because they sent me to the January course 
and the week-long trek in the mountains was on snowshoes — pure misery. 



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I've been seeing Janet, my girlfriend from college, almost every week-end 
since last summer. I've told her about my work in the company and about my 
hopes to be assigned abroad. We've talked a lot about marriage but we're not sure 
what to do. She would like to stay in California, and I wonder if I should wait 
until after the JOT course is over a year from now. I'll be leaving for Washington 
in a couple of weeks and we'll see how we endure the separation. 

Washington DC September 1959 

It didn't take a long time for us to decide. Less than a month after I left 
California we agreed we didn't want to wait any longer, so now we begin a life 
together. We were married at Notre Dame as a kind of compromise because 
Janet's family is Congregationalist and she felt a wedding in a Catholic Church in 
her home town might raise difficulties. We took a small apartment in the building 
complex where Vice-President Nixon and his wife first lived when they came to 
Washington after his election to the House. We have furniture to buy, but family 
and friends have been exceedingly generous and new gifts arrive every day. We 
can save some money by shopping at the military commissaries because I'm still 
on active duty. 

My military cover unit is an Air Intelligence Service Squadron at Boiling Air 
Force Base in Washington. My cover telephone number has changed but the 
same two telephone operators are rolling the same dice to see who will be the 
colonel and who the major. 

Ferguson said I probably won't be discharged until June or July of next year, 
which will coincide with the end of the JOT training programme. 

All the JOT'S in the OCS class ahead of me, my class, and the one behind me 
are united in the JOT programme. Even so, we make up only about fifteen of the 
sixty-odd in the class - which includes only six women. The JOT classes, which 
have just started, are held in the Recreation and Services Building, the same one 
where I was tested by the Assessment and Evaluation staff two years ago. The 'A 
and E' routines are even longer now than before and I'm going through all of 
those monotonous tests again. The only thing we lack is a mammoth Potomac 
Park football stadium for Saturday afternoon frenzy — the rest is the old college 
routine once more. 

The opening sessions in the training course were welcoming speeches by 
Allen Dulles, Colonel Baird, and others who have been showering us with 



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affection and praise for following them into this life of deliberate self-abnegation, 
unknown sacrifice and silent courage as secret warriors in the battles of our time. 
Very romantic. Each one of us in the class represents the one in a hundred, or one 
in a thousand, of the total number of applicants for the JOT programme who were 
finally accepted. The company leaders tell us we're entering the world's second 
oldest profession (maybe even the first, but that can't be proved) and if there are 
any uneasy consciences in the group they have been soothed by Biblical 
quotations showing that no less a figure than God himself instituted spying. So 
much for the moral question. 

But our country had forgotten the lesson of Jericho. In 1929 Secretary of 
State H. L. Stimson closed the code-breaking operation known as the Black 
Chamber with the scolding that 'gentlemen don't read other people's mail'. Until 
Pearl Harbor foreign intelligence in the United States was all but forgotten. Then 
there were the heroics of the OSS during the war followed by the decision of 
President and Congress alike not to risk another surprise attack by leaving early 
warning to peace-time military neglect once again. So the civilian CIA was 
established in 1947 to provide a centralized agency for processing all foreign 
intelligence and for producing a national intelligence product blessed by 
enlightenment from all possible sources. 

After two years away with the Air Force these first sessions have been 
stimulating and even exciting — almost like a raging thirst being finally quenched. 
The JOT office has arranged evening language courses for anyone interested, and 
Janet and I have a class in Spanish three nights a week. It's nice that the company 
includes the wives as much as possible. Otherwise they would really be at a 
distance, because everything we study and read, almost, is classified. We selected 
Spanish only because that was my language at school, but there is a monetary 
awards programme for maintenance and improvement of foreign languages and it 
might be a way to earn a little extra. Things are working out just right. 

Washington DC October 1959 

We've just finished a month studying communism and Soviet foreign policy, 
and soon we'll begin studying the government organization for national security, 
where the Agency fits in, and the bureaucratic organization of headquarters. Each 
of us has periodic sessions with one of the JOT counsellors to discuss possible 
future assignments and where to continue training after Christmas. Almost 



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everyone seems to want to go into secret operations, which will mean six months' 
special training away from Washington at a place called 'the farm'. I told 
Ferguson I wanted to go to 'the farm', but he was non-committal. 

The lectures and readings in communism have been especially interesting. 
The Office of Training stays away from philosophy — dialectical materialism 
wasn't even mentioned — while concentrating on the Soviets. It's a practical 
approach, of sorts, because what the CIA is up against, one way or another, is 
Russian expansion directed by the Communist Party of the Soviet Union — 
CPSU. The Leninist concept of the party, particularly its elitist and secretive 
nature, and the CPSU's difficulties in reconciling pragmatism with ideology 
(Russian domination of the minority nationalities, NEP, collectivization and 
elimination of the kulaks, united front doctrine, the Molotov-Ribbentrop pact) are 
seen as related to one goal: obtaining, retaining and expanding power. 

Subservience of foreign communist parties to the CPSU is another theme 
given considerable emphasis — it's hard to believe that the Soviets with a straight 
face preach that the first obligation of every communist, no matter what 
nationality, is to defend the Soviet Union. Institutions such as the Comintern and 
Cominform served that purpose in their time, but the KGB is the principal organ. 
Much importance, of course, is given to the Soviet security organizations, from 
the Cheka down. 

The writings of defectors from communism were the most interesting: Louis 
Budenz, Howard Fast, The God that Failed, Kravchenko, Gouzenko, Petrov. But 
the most devastating for the Soviets, because of his criticism of Leninist party 
doctrine, is Milovan Djilas. The other day we split into small groups and 
interviewed Peter Deriabin J — he's the highest-ranked KGB defector yet. It was 
done through closed-circuit television so that he could not see us (to protect our 
security) and he was disguised and spoke through an interpreter (to protect his 
security because he is living in the Washington area). 

The central theory is that communist attempts to set up dictatorships around 
the world are really manifestations of Soviet expansion which in turn is 
determined by the need to maintain CPSU power at home. Our country is the real 
target, however, and the Soviets have said often enough that peace is impossible 
until the US is defeated. Now we're going to study how the government, and the 
CIA in particular, are set up to counter the Soviet threat. 

Washington DC November 1959 



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A theme that is continually repeated during these sessions is that the CIA 
does not make policy. The Agency's job is to provide the intelligence or 
information that is used by the President and other policymakers. It only executes 
policy, and collects information to be used in policy decisions by people outside 
the Agency. It doesn't make policy. 

For several weeks we have been listening to lectures and reading documents 
on the government machinery for national security. The basic document is the 
National Security Act of 1947 which set up the National Security Council (NSC) 
as the highest body concerned with national security. Chaired by the President, 
the NSC is composed of the following statutory members: the Secretary of State, 
the Secretary of Defense, the Director of the Office of Civil and Defense 
Mobilization, and the Vice-President. Membership can be enlarged whenever the 
President desires by ad hoc appointments such as the Attorney-General or the 
Secretary of the Treasury. The Chairman of the Joint Chiefs of Staff (JCS) and 
the Director of Central Intelligence (DCI) are NSC observers. [1] 

The NSC has its own staff and offices in the Executive Office Building next 
to the White House and, in addition, has three important subordinate groups 
reporting to it: the NSC Planning Board, the Operations Coordination Board 
(OCB), [2] and the Intelligence Advisory Committee (IAC). [3] The NSC 
Planning Board works mostly on preparing materials for NSC meetings and on 
following up the implementation of NSC decisions. The OCB is of very special 
interest to the Agency because its function is to review and approve CIA action 
operations (as opposed to collection of information) such as propaganda, 
paramilitary operations and political warfare. The OCB is composed of the DCI, 
the Under-Secretary of State, the Deputy Secretary of Defence and ad hoc 
members at the Under-Secretary level. 

The IAC is like a board of directors of the intelligence community, chaired 
by the DCI and having as members the Deputy Director of Central Intelligence, 
the intelligence chiefs of the Army, Navy, Air Force, Joint Chiefs of Staff, the 
Chief of Intelligence and Research (I N R) of the Department of State and the 
Director of the National Security Agency. Intelligence chiefs of the FBI and the 
Atomic Energy Commission sit on the IAC when appropriate. The purpose of the 
I A C is to assign intelligence tasks among the different services according, at 
least in theory, to which service can best do the job. It is also designed to avoid 
both overlaps and gaps in the national intelligence effort, and it has several 



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subordinate interdepartmental groups such as the Board of National Estimates, 
the National Intelligence Survey Committee and the Watch Committee, each of 
which is chaired by a CIA officer. 

As part of the NSC mechanism the National Security Act of . 1947 
established the office of the DCI as the NSC's principal intelligence officer and 
the Central Intelligence Agency as the organization that would effect the 
centralizing of the national intelligence effort. The CIA has five statutory 
functions: 

1. To advise the NSC in matters concerning such intelligence activities of the 
government departments and agencies as relate to national security. 

2. To make recommendations to the NSC for the coordination of such 
intelligence activities. 

3. To correlate and evaluate intelligence relating to the national security, and 
provide for the appropriate dissemination of such intelligence within the 
government. 

4. To perform, for the benefit of the existing intelligence agencies, such 
additional services of common concern as the NSC determines can be more 
efficiently accomplished centrally. 

5. To perform such other functions and duties related to intelligence affecting 
the national security as the NSC may from time to time direct. 

It is this fifth function which occupies most of the CIA's time and money. It's 
the dagger inside the cloak. Covert action, although it is not spelled out for us 
this way, is a form of intervention somewhere between correct, polite diplomacy 
and outright military invasion. Covert action is the real reason for the CIA's 
existence, and it was born out of political and economic necessity. 

The DCI is described as a man with two hats. First, he is the principal 
intelligence advisor "to the President and the NSC, and secondly, he is the 
Director of the Central Intelligence Agency. Formal commands are given by the 
NSC to the DCI through Top Secret Documents called National Security Council 



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Intelligence Directives (NSCID's — pronounced non-skids). The NSCID's are put 
into effect by documents issued by the DCI to the concerned member of the 
intelligence community, including the CIA, these documents being called 
Director of Central Intelligence Directives (DCID's). Within the CIA the DCID's 
are particularized in the thick and continually changing volumes of regulations 
and other instructions. We have been studying, then, the very broadly worded 
NSCID's, the more particularized DCID's, and the specific CIA regulations. 
These are the documents that govern everything from foreign intelligence 
collection operations through political, psychological and paramilitary operations 
to communications and electronic intelligence efforts. Clearly, the documentation 
and the bureaucratic structure demonstrate that what the Agency does is ordered 
by the President and the NSC. The Agency neither makes decisions on policy nor 
acts on its own account. It is an instrument of the President ... to use in any way 
he pleases. 

*** 

We have also examined the question of Congressional monitoring of 
intelligence activities and of the Agency in particular. The problem resides in the 
National Security Act of 1947 and also in its amendment, the Central Intelligence 
Agency Act of 1949. These laws charged the DCI with protecting the 'sources 
and methods' of the US intelligence effort and also exempted the DCI and the 
Bureau of the Budget from reporting to Congress on the organization, function, 
personnel and expenditures of the CIA — whose budget is hidden in the budgets 
of other executive agencies. The DCI, in fact, can secretly spend whatever 
portion of the CIA budget he determines necessary, with no other accounting than 
his own signature. Such expenditures, free from review by Congress or the 
General Accounting Office or, in theory, by anyone outside the executive branch, 
are called 'unvouchered funds'. By passage of these laws Congress has sealed 
itself off from CIA activities, although four small sub-committees are informed 
periodically on important matters by the DCI. These are the Senate and House 
sub-committees of the Armed Services and Appropriations Committees, and the 
speeches of their principal spokesman, Senator Richard Russell, are required 
reading for the JOT's. 

There have been several times when CI A autonomy was threatened. The 
Hoover Commission Task Force on Intelligence Activities headed by General 



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Mark Clark recommended in 1955 that a Congressional Watchdog Committee be 
established to oversee the CIA much as the Joint Congressional Committee on 
Atomic Energy watches over the AEC. The Clark Committee, in fact, did not 
believe the sub-committees of the Armed Services and Appropriations 
Committees were able to exercise effectively the Congressional monitoring 
function. However, the problem was corrected, according to the Agency position, 
when President Eisenhower, early in 1956, established his own appointative 
committee to oversee the Agency This is the President's Board of Consultants on 
Foreign Intelligence Activities, [4] whose chairman is James R. Killian, President 
of Massachusetts Institute of Technology. It can provide the kind of private 
citizen' monitoring of the Agency that Congress didn't want. Moreover, our 
speakers have pointed out, the more Congress gets into the act the greater the 
danger of accidental revelation of secrets by indiscreet politicians. Established 
relationships with intelligence services of other countries, like Great Britain, 
might be complicated. The Congress was quite right at the beginning in giving up 
control — so much for them, their job is to appropriate the money. 

Washington DC December 1959 

Studying the Agency bureaucratic structure has been fascinating but at the 
same time exhausting — there's been no end to organizational charts and speeches 
by representatives from everyone of the divisions, sub-divisions, offices and sub- 
offices. Each of the speakers has a story of how his office broke an important 
case by having just the right piece of information or person for the job. 

Woven into the training programme since the first days in September are 
constant reminders of the need for tight security. Capabilities and intentions 'of 
the enemy must be discovered, whether in the Kremlin, in a Soviet nuclear 
weapons factory, at a missile development site, or in the meeting-hall of an 
obscure communist party in Africa. But of utmost importance, since knowledge 
of the enemy is necessarily limited, is the protection of our intelligence. We don't 
want the enemy to know what we know about him, for then he could take 
measures to annul our advantage. So we have to protect our intelligence by 
building a curtain of secrecy called' security'. Receptionists, guards, badges, 
barred windows, combination safe-filing cabinets, polygraphs, background 
investigations, punishments for security violations, compartmentation and the 
'need-to-know' principle. 



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Compartmentation is the separation of activities whereby a person or group 
performing a particular task do not know what tasks other people are doing. The 
gap between people doing different jobs is bridged by the need to know. If a 
person working in intelligence has a definite need to know what others are doing 
on a specific job, he will be given access. If not, he is expected to subdue normal 
curiosity. The CIA is organized with built-in compartmentation designed to give 
maximum protection to the secret information collected for the policymakers. 

The CIA bureaucracy is fairly complicated. [5] At the top of the pyramid are 
the executive offices composed of the Offices of the Director, the Deputy 
Director, the Inspector-General, the General Counsel, the Comptroller and the 
Cable Secretariat. 

Below the executive offices are four deputy directorates, each responsible for 
distinct activities and each named after the title of the deputy director who heads 
it. They are the DDI, headed by the Deputy Director, Intelligence; the DDP, 
headed by the Deputy Director, Plans; the DDS, headed by the Deputy Director, 
Support; and the DDC, headed by the Deputy Director, Coordination. The DDC, 
we were told, is a small office dealing with management problems, and we have 
spent practically no time discussing it. The other three deputy directorates are the 
bone and muscle of the Agency. (See pp. 3 19-20 for organizational changes in the 
early 1960s.) 

The DDI is the component that sets requirements, engages in some 
collection, evaluates and collates intelligence, and produces the finished product. 
[6] It consists of several different offices, each of which provides a coordinating 
function for the entire intelligence community. They are the Office of Current 
Intelligence (OCI), the Office of National Estimates (ONE), the Office of Basic 
Intelligence (OBI), the Office of Scientific Intelligence (OSI), the Office of 
Research and Reports (ORR), the Office of Central Reference (OCR), the Office 
of Operations (00), the Foreign Broadcast Information Service (FBIS), the 
National Photographic Interpretation Center (NPIC). We have been asked to 
write examples of the different types of specialized report prepared by these 
offices, and we have visited several of them. It is interesting to note that over 80 
per cent of the information that goes into finished intelligence reports is from 
overt sources such as scientific and technical journals, political speeches and 
other public documents. The rest is obtained from secret agents or techniques, 
and the difference, of course, is in the quality and sensitivity of the covertly 
collected intelligence. 



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The clandestine collection part of the CIA is the DDP which is also known as 
the Clandestine Services (CS). It consists of a headquarters' organization with 
field stations and bases in almost all foreign countries. Although we reviewed the 
headquarters' organization of the DDP we were told that the details of how secret 
operations are run will be given only during the later instruction. Only the JOT'S 
who express a desire to serve in the DDP and who agree in writing to take an 
assignment to any country will be given the advanced operational training at 'the 
farm'. Those who want to work in some area of the Agency other than the DDP 
will go on to specialized training in headquarters. 

The bulk of the CS is divided into operating divisions and senior staffs. [7] 
the operating divisions are in charge of geographical areas and certain specialized 
services. The senior staffs are in charge of coordination and review of all 
operational activities within the functional category of each — which are 
reflections of basic CIA operational theory. There are three senior staffs: the 
Foreign Intelligence (FI) staff; the Psychological Warfare and Paramilitary (PP) 
staff; and the Counter-intelligence (CI) staff. The FI staff is concerned with 
intelligence collection operations, the PP staff with action operations and the CI 
staff with protection of FI and PP operations. The difference between collection 
and action operations is that collection should leave no sign, whereas action 
operations always have a visible effect. (See pp. 319-20 for organizational 
changes in 1960s.) 

A collection operation might be the running of an agent in the Soviet 
Ministry of Defence who is reporting on military planning. An action operation 
might be an anti- communist intellectual journal, supported by CIA money, passed 
through a Russian emigre organization with headquarters in Paris. Collection 
operations respond to the needs of the DDI, for producing finished intelligence — 
which in turn depends on the needs of the NSC and other consumers such as the 
military services and the Department of State. Action operations consist of the 
control, guidance and support of individuals and organizations engaged in the 
battle against communism throughout the world. They include labour unions, 
youth and student organizations, public information media, professional societies 
such as journalists and lawyers, businessmen's organizations, politicians and 
political parties and governments. Action operations also include the training and 
support of irregular military forces such as guerrillas in Tibet or montagnards in 
Vietnam or saboteurs in Communist China. Protection operations consists 
generally of CIA efforts to protect the Agency against hostile penetration and to 



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penetrate intelligence services of other countries in order to discover what 
operations those services are running against us. 

The DDP area divisions are responsible for all activities of the CS within 
designated areas. These divisions are for Western Europe (WE) (which includes 
Canada), Eastern Europe (EE), Soviet Russia (SR), the Near East (NE), Africa 
(AF), the Far East (FE) and the Western Hemisphere (WH). Each area division is 
headed by a Division Chief and Deputy Chief whose offices include staffs 
responsible for review of FI, PP and CI operations within the geographical area. 

[8] 

Within each division the geographical area is divided into branches which 
may include one or more countries as well as functional specialities peculiar to 
the division. The branches in turn are divided into country desks when more than 
one country is included in the branch. Thus the Polish branch of EE Division 
deals exclusively with matters on Poland while the Central American branch of 
WH Division has separate desks for six different countries. 

A division and branch of the Clandestine Services in headquarters are 
responsible for supporting field stations and bases in the foreign countries within 
its area, as well as for keeping the senior staffs and the DDP advised on all 
matters related to those countries, informational as well as operational. A 
headquarters' division will provide personnel for the stations and bases, arrange 
training support by specialists and, most important, process the paper-work 
required for all field operations. Every operation; every agent and every report 
sent from the field to headquarters requires review and routing of documents. 
Area divisions are responsible for seeing that this enormous flow of paper is 
properly channelled to the appropriate offices of the CS for review, advice and 
approval or disapproval. Intelligence reports, as opposed to operational reports 
which deal with the mechanics of how information is obtained, also need 
processing for spelling, grammatical usage and routing to interested components 
of the CS, the DDI and the rest of the intelligence community. Processing of the 
operational and intelligence reports from the field is the job of desk officers in 
the area divisions. 

The CS includes four divisions that serve the rest. The International 
Organizations Division (10) supervises CIA relations with labour, youth, student, 
professional and news media organizations throughout the world. Activities in 
these fields are coordinated by 10 with the PP staff and with the area divisions 
and branches concerned. Contact between the CIA and officials of those 



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organizations might be handled by an officer of 10 or by a station officer where a 
particular operational activity takes place. 

The Technical Services Division (TSD) provides support to operations in all 
area divisions through experts in listening devices, photography, lock-picking, 
invisible writing, clandestine opening and closing of correspondence, disguise, 
containers with hidden compartments, handwriting analysis, identification of 
persons through saliva analysis from objects such as cigarette butts, and many 
other technical services. Specialists are available for training agents as well as to 
perform tasks themselves. Several TSD support bases exist in foreign countries 
for regional support. The TSD also has a continuing research programme for 
improving its capabilities and for developing protective measures against the 
devices of foreign services, especially the KGB. 

Division D is the CS unit that supports the National Security Agency in 
cracking the codes of foreign governments. When it is necessary to mount 
operations in the field against the communications of other countries, NSA turns 
to its sister intelligence services, such as the military services, all of which have 
sizable monitoring operations going against communist countries' military 
communications. Or NSA could turn to Division D which coordinates CIA 
collection support for NSA. Thus Division D provides expert knowledge for the 
planning of operations to recruit code clerks or to install technical devices to 
enable the decrypting of coded messages. Division D seems to be the most hush- 
hush of the CS operating divisions, but, like 1 0 Division, its activities are always 
coordinated with the geographical area divisions and with station chiefs abroad. 

The Records Integration Division (RID) is to the Clandestine Services what 
OCR is to the DDI. It is somewhat different, however, because of the different 
needs of the DDR Clearly the Agency has spared no expense with the best 
system for storage and retrieval that IBM can build. Numbering systems exist for 
topics and sub-topics for every country for storing intelligence reports. They also 
exist for all agents and the different phases of each operation. Millions of names 
are indexed for easy electronic processing and retrieval and microfilm is 
automated so that copies of documents can be obtained simply by pushing 
buttons according to coding classifications — practically instant retrieval of one 
document from among millions. As the central repository for all CS intelligence 
and operational reports, RID serves the entire headquarters DDP organization and 
the field stations as well. 



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The DDS [9] is the support structure of the Agency, much of which serves 
the DDR This is the deputy directorate that we belong to as JOT'S. The most 
important offices of the DDS are Personnel, Security, Training, Finance, 
Communications and Logistics. Each of these offices has an important function, 
but most of us have been pushing hard for the special operations training and for 
assignment to the DDP. 

A few days ago a list was read of those who have been accepted for 'the 
farm'. I was on the list — practically everyone was — and we had a special briefing 
on what lies ahead. 'The farm' is officially known by the cryptonym ISOLATION 
(cryptonyms are always written in capitals), and is a covert training site run by 
the Office of Training under military cover. It is a few hours' drive from 
Washington, and we will spend most of the next six months there. On Friday 
evenings those who wish will be allowed to check out for the week-end. The 
briefing officer said that there is daily Agency air service (military cover) 
between Washington National' Airport and ISOLATION, but the flights are used 
mostly by Agency personnel not assigned for long periods to the base. At the 
briefer's suggestion we have divided into groups of four or five for car pools so 
that as many wives as possible will be able to get around Washington during the 
week. Apparently we won't need transportation at ISOLATION anyway. 

We have been given a Washington telephone number and told that it is a 
direct line to ISOLATION for families but only to be used for emergencies. The 
briefing officer finally told us the name and location of the base, the best route 
for driving and our instructions for reporting. He placed extreme emphasis on 
protecting the cover for the base and the sensitivity of its identification. He said 
that agents from all over the world are trained there and they are not supposed to 
know where they are. We probably won't even see them. The name of the base is 
so sensitive, in fact, that we were told not to tell any of the JOT classmates who 
weren't taking the operations training, nor any other Agency employees, nor even 
our wives. Nobody talks about ISOLATION, and in conversations and even 
formal briefing sessions it's just 'the farm'. 

We report to 'the farm' the first Monday after New Year's Day. I feel relaxed 
now - the customary over-eagerness has disappeared. I've been 'accepted into the 
work I want and only an utter catastrophe can wash me out. Six more months of 
training, study, learning a profession. Then an assignment to a DDP headquarters 
desk and in another year or two I'll be a secret overseas operative. 



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Camp Peary, Virginia January 1960 

The entrance to Camp Peary is an ordinary looking gatehouse manned by 
military police about fifteen minutes out of Williamsburg on the road towards 
Richmond. We showed our company badges to a guard and he instructed our car 
pool driver which turns to take to get to the JOT area. Our first session was in an 
amphitheatre called the 'pit' where we were welcomed by the ISOLATION Base 
Chief — formerly a Chief of Station in Mexico City. Then we were briefed by the 
Base Security Officer on the do's and don'ts of ISOLATION. At anyone time 
there are a number of different training sessions being conducted here, some with 
foreigners who are not even supposed to know that they are in the US. These are 
called' black' trainees and are. restricted to areas away from the JOT site and 
other' normal' activities. From time to time we will hear weapons firing and 
explosions as well as aircraft movement. 

We are to stay in the general area of the JOT site except when coming or 
going from the base entrance, although we will have training sessions at sites all 
over the base where we will be taken by bus. Wherever we go on the base we are 
to take extreme caution with cigarette packages, beer cans or other objects that 
might reveal the location of the base to 'black' trainees. We are to wear Army 
fatigues at all times on the base. 

We are discouraged, although not forbidden, from leaving the base at night, 
but the Base Chief told us we will have night study and training sessions that will 
leave little time for visits to Williamsburg. Since all of us pertain to bogus 
Defense Department cover units in Washington, our cover story for ISOLATION 
is that we are Defense Department employees temporarily assigned to Camp 
Peary. The security officer gave us the name of an Army colonel and his 
Pentagon telephone extension in the unlikely event of verification of our status at 
Camp Peary becoming necessary. This Pentagon extension rings in the Camp 
Peary administration building where a CIA. officer plays the part of the colonel. 

The base is thickly wooded and surrounded by high, chain-link fences topped 
by barbed-wire with conveniently placed signs warning: 'US Government 
Reservation. No Trespassing.' The northern boundary of the base is the York 
River and the base itself is divided internally into different tightly-controlled 
areas including administration, which is towards the entrance, the JOT training 
site, the staff housing area, the landing field, and distinct sites for training in 
border crossing, sabotage, weapons, air and maritime operations, ambush, 



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evasion and escape, and clandestine meetings. Deer are plentiful as the base was 
once a wildlife refuge, and there are several ranges for hunting as well as a 
couple of stocked lakes. 

After the fatigues were issued we checked into the old wooden-frame 
barracks that have double rooms rather than open bays. All the buildings, in fact, 
are World War II-style frame buildings except the new brick gymnasium. There 
are classroom buildings; the training office where instructors have their offices, 
mess hall, officers' club, movie theatre, football fields and a softball diamond. 
For leisure time we have the club and sports facilities and even a language lab 
where we can work with tapes. ISOLATION won't be bad at all, and on Friday 
nights we can drive back to Washington for the week-ends. 

Each of us has been assigned an advisor from the teaching staff with whom 
we will meet from time to time to discuss our strengths and weaknesses. Mine is 
John Allen, J an 'old NE hand' who served in Cairo. The training course will be 
divided along the usual lines of Foreign Intelligence (collection), Counter- 
intelligence (protection) and Paramilitary and Psychological (action). We will 
also spend considerable time, they said, studying the tools of the clandestine 
operator, otherwise known as 'tradecraft'. Finally there will be many practical 
exercises in and around ISOLATION as part of the war-games technique used to 
create the training scenario. 

As all clandestine operations take place within a political context, the first 
consideration is the set of objective factors that create the 'operational 
environment or climate'. These factors include the friendliness or hostility of the 
host government, the level of sophistication of the host internal security services 
and other intelligence services operating in the same area, the known and 
presumed aims of these services, the effectiveness and sophistication of the local 
communist and other revolutionary organizations, local language, dress and other 
customs, and the general political atmosphere of repression or liberalism. These 
are the objective conditions within which clandestine operations are undertaken, 
and they determine the manner in which these are executed. Running an agent- 
penetration of the Ministry of Defense in Baghdad obviously differs from 
running the same type of penetration in Paris or Prague or Bogota. As the degree 
of clandestinity can vary according to the tools and techniques employed — 
operational security practices can be more extreme or less — the 'operational 
environment' determines whether goals are realistic and how they are to be 
achieved. It includes a continuing evaluation of enemy capabilities. 



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Taking into account, then, the operational environment, each CIA station has 
a charter or general operational guide called the Related Missions Directive 
(RMD). This is the document that establishes priorities and objectives and is, in 
effect, the DCI'S instructions to the Chief of Station. In any country where there 
is an official Soviet presence, such as an embassy or trade mission, the first 
priority for the RMD is almost always the penetration of the Soviet mission 
through the recruitment of its personnel or by a technical device. Penetration 
operations against Chinese and other communist governments follow in priority 
as do intelligence collection efforts against indigenous revolutionary movements 
and local governments, whether friendly or hostile. CI and PP operations are also 
included in the RMD, and when a station requests headquarters' approval of new 
operations or continuation of existing operations, reference is made to the 
appropriate paragraphs of the RMD. 

I suppose my problem will eventually disappear, but I find it all rather 
complicated because in the CIA cryptonyms and pseudonyms are used in place of 
true names. There are many standard ones and, when reading, one has constantly 
to refer from the text with cryptonyms to the cryptonym lists which give a 
number, and then look up the same number on a separate true name list. The 
cryptonym and true name lists are never kept in the same safe. Cryptonyms 
consist of two letters that determine a general category or place, followed by 
letters that form a word with the first two, or by another word. 

Thus the United States government is ODYOKE. The Department of State is 
ODACID, the Department of Defense is ODEARL, the Navy is ODOATH, the 
FBI is ODENVY. All government agencies have a cryptonym beginning with 
OD. The CIA'S cryptonym is KUBAR K and all Agency components have 
cryptonyms beginning with KU. The Clandestine Services is KUDOVE, the FI 
staff (and FI operations generically) is KUTUBE, the CI staff (and CI operations) 
is KUDESK, the PP staff (and PP operations) is KUCAGE. Every foreign 
country and every agent and operation in that country has a cryptonym that 
begins with the same two letters — AE for the Soviet Union, BE for Poland, DI 
for Czechoslovakia, DM for Yugoslavia, SM for the United Kingdom, DN for 
South Korea, etc .. AELADLE, AEJAMMER and AEBROOM are cryptonyms 
for operations against the Soviets. 

Cryptonyms are used to substitute for true names in order to protect the true 
identities of persons and places mentioned in correspondence. They are only used 
in documents of the Clandestine Services. The Records Integration Division 



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assigns new cryptonyms whenever a new operation or agent is proposed, using 
the first two letters that correspond to the particular country. In certain cases 
agents and operations are given cryptonyms of which the first two letters refer to 
operations that occur in several countries — particularly the international 
organizations involving labour and students. In operational correspondence when 
no cryptonym has yet been assigned for a particular person, the word 
IDENTITY is substituted in the text and the true name is sent in separate 
correspondence for reconciliation with the original document by the addressee. 

All KUDOVE officers who engage in operations .are assigned a pseudonym 
consisting of a first name, middle initial and last name which is used in the same 
fashion as cryptonyms — in order to preserve the officer's true identity should 
correspondence be lost or stolen. Pseudonyms are always written with the last 
name in capital letters, e.g. Rodney J. PRINGLE. 

All this seems confusing at first — it's really like learning a new language. But 
it adds a certain spice to the work, like a special taste that helps develop 
institutional identity — more and more of the inside group syndrome. 

Camp Peary, Virginia February 1960 

We still have plenty of snow on the ground and on Sunday nights when we 
return from Washington the deer are so thick along the base roads that we almost 
run into them. We've all gotten to know each other more since coming to 
ISOLATION. Almost any type of person you want can be found in the class. We 
have a physical training programme three or four times a week at the gym — 
calesthenics, basketball, squash, volleyball, weights. We also have training at the 
gym in defence, disarming, maiming, and even killing with bare hands — just how 
and where to strike, as in karate and judo. Our instructor in these skills (at first 
nobody believed his real name was Burt Courage) was formerly on Saipan in the 
South Pacific, which is another secret base of the Office of Training. 

It's hard work. There is a physical-conditioning program, plenty of practice in 
the martial arts. How to disarm or cripple, if necessary kill an opponent. We have 
classes in propaganda, infiltration-exfiltration, youth and student operations, 
labor operations, targeting and penetration of enemy organizations. How to run 
liaison projects with friendly intelligence services so as to give as little and get as 
much information as possible. Anti-Soviet operations — that subject gets special 
attention. We have classes in framing Russian officials, trying to get them to 



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defect. The major subject, though, is how to run agents — single agents, networks 
of agents. 

In the classes we have been studying the different kinds of Foreign 
Intelligence — FI, or KUTUBE — operations conducted by the Clandestine 
Services. Although these operations are designed to discover the capabilities and 
intentions of foreign powers, particularly enemy or unfriendly governments, vis- 
a-vis the US, they are supposed to focus on secrets rather than on overt or public 
information. In addition to discovering ordinary state secrets, the CS is 
responsible for obtaining the most complete and accurate information possible on 
the global manifestations of Soviet imperialism, that is, on local communist 
parties and related political groups. The exceptions to the world-wide operating 
charter of the CS is the agreement among the US, the United Kingdom, Australia, 
Canada and New Zealand whereby each has formally promised to abstain from 
secret operations of any kind within the territory of the others except with prior 
approval of the host government. The governments of all other nations, their 
internal political groups and their scientific, military and economic secrets are 
fair game. 

FI operations originate with the informational needs of US policymakers, 
specified in the voluminous requirements lists prepared by the various sections of 
the DDI that produce finished intelligence. These requirements are also reflected 
in the station RMD. The station, incidentally, is the CI A office in the capital city 
of a foreign country. Other major cities of the country may have CIA offices 
subordinate to the station and called bases. In most countries the stations and 
bases are in the political sections of the embassies or consulates, with some 
officers assigned for cover purposes to other sections such as economic or 
consular. In certain countries, however, such as Panama and Germany the CIA 
stations are on US military installations with only the chief and a minimum of 
other officers having diplomatic status. Most of the others are under cover as 
civilian employees of the Department of Defense with assignment to the military 
bases. 

The station's task is to determine the different ways desired information can 
be obtained and to propose to headquarters the method thought most appropriate. 
This task is called 'targeting', and for every operation targeting receives its 
written expression in a Field Project Outline which is prepared at the station and 
includes all the operational details such as the purpose or desired outcome, 
specific target, the agents to be involved, any technical devices needed, support 



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needed from headquarters or other stations, security and cover considerations 
with an assessment of the 'flap potential' meaning the possible scandal if the 
operation is discovered, and costs. Most overseas CIA operations are described in 
Field Project Outlines, which are forwarded to headquarters for suggestions and 
approval or disapproval by all interested headquarters' sections of the CS. 

Depending on the cost or sensitivity of an operation, the Project Outline is 
approved on a lower or higher level in headquarters, from Division Chief to 
Assistant DDP, to DDP, to DCI. Some operations require approval outside the 
CIA, but these are usually PP (action) projects that are submitted to the 
Operations Coordination Board of the National Security Council (the Under- 
Secretary level). 

Projects for intelligence collection operations are generally approved for 
periods of one year and can be renewed. The request for Project Renewal is a 
document almost identical to the Field Project Outline and it includes details of 
the operation's progress over the past year such as productivity, costs, security 
problems, new agents and justification for continuation. Operations that have 
failed to meet expectations or that are compromised by a security flap or that 
have simply dried up are cancelled through a 'Request for Project Termination' 
forwarded from the station to headquarters. This document includes the details on 
reasons for termination, disposal of agents and property, alternative sources, 
security and cover considerations and support requirements from other stations or 
from headquarters. 

Correspondence among CIA stations, bases and headquarters is the lifeline of 
Agency operations. There are two basic types: operational reporting and 
intelligence reporting. In operational correspondence, matters discussed include 
security problems, cover, finances, agent access to targets, levels of production 
(but not the facts themselves), proposals for new recruitments or termination, 
equipment requirements, agent motivation, and any other occurrences that affect 
the operation. On every operation an Operational Progress Report is required by 
headquarters every three months, but much more frequent correspondence is 
usually necessary. 

Intelligence reporting from overseas operations comes in the form of a Field 
Information Report (FIR) which contains fads related usually to one subject but 
possibly from several sources. The FIR relates the facts as obtained from the 
sources although source or field comments may be added. FIR's are prepared in 
the stations on special mats for printing which are forwarded to headquarters for 



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reproduction and distribution. FIR's contain a heading that includes the name of 
the country or countries concerned, the subject-matter of the report, a description 
of the source (prepared to protect his identity), an evaluation of the source's 
reliability and an evaluation of the accuracy of the contents of the report. The 
body of the report follows with the clarifying comments or opinions of source, 
station or headquarters at the end. In headquarters the FIR's are given CS 
numbers for retrieval purposes, and copies are sent, for instance, to DDI sections, 
the Departments of State and Defense, the FBI or the White House. 

Both operational reports and intelligence reports may be sent to headquarters 
or other stations and bases either via the diplomatic pouch or by cable or 
wireless. Practically all stations and bases have radio transmitting and receiving 
equipment although commercial telegraph service is frequently used. 

How do we get the information that goes into the intelligence reports of FI 
operations? Mostly through paid agents. On the highest level there is the 
politician, scientist, economist or military leader who is actually creating the 
events that the Agency would like to forecast. This kind of person, however, 
because of his position of leadership, is the least likely to tell the CIA or the US 
government his own country's official secrets. There are some, however, who can 
be convinced that the interests of the US and their own country are so close, even 
identical, that nothing is lost by providing the information wanted by the CIA. In 
other cases what the high level official says or plans may be placed on paper to 
which access may be obtained by a whole variety of secondary level officials, 
functionaries or colleagues. People of this level may betray their leader's 
confidence for a great variety of motives. Then there is the third level of 
prospective agents who simply have physical access to a target area but not to 
documents themselves. These people may be trained to place listening devices 
where sensitive conversations are held or to open secure document storage 
containers or to photograph documents. Finally there is a great variety of people 
who can assist in operations but who have no direct access to the sources 
themselves. These are the support agents who rent houses and apartments, buy 
vehicles, serve as couriers, and perform countless additional necessary tasks. 

There are, then, in addition to operations involving high-level, primary 
sources, a category of extremely important secondary operations called 'support 
operations'. Often targeting to primary sources is effected through support 
operations. These operations involve the use of surveillance teams to follow 
people in the streets, observations posts to watch the comings and goings from 



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buildings, multiple forms of photography, interception of correspondence from 
the mails, access to important statistics and identification files of police and other 
security services, airline, rail and ship passenger and freight lists, devices for 
listening, telephone tapping and telegraph records. These operations may very 
well yield sensitive, high quality intelligence but more often they are used to 
identify the people we really need to get at, who may be recruited as intelligence 
collection agents. Support operations are also indispensable for knowledge of 
target personalities in order to discover motives that might make them accept or 
decline a recruitment approach: strengths, weaknesses, problems, ambitions, 
failures, enmities, vulnerabilities. 

Another type of FI operation that is very common throughout the free world 
results from the working relationships between the CIA and the intelligence and 
security services of foreign countries. Contacts with foreign services are known 
as liaison operations and their purpose is to exchange information, mount joint 
operations and penetrate foreign services. The general rule on exchange of 
information is to give nothing unless necessary. But since foreign services 
usually press for an exchange, and often in poor countries they collect very little 
useful information on their own, the second rule is to preserve a net gain, or 
favourable balance towards the CIA in the exchange. Regulations determine the 
types of information that can be exchanged and the record-keeping required. 

The 'third agency rule' is an important operating principle in liaison 
operations. Information passed from one agency to a second agency cannot be 
passed by the second agency to a third agency without prior approval of the first. 
The purpose of the rule, obviously, is to preserve the security of operations and. 
the secrecy of information as well as the secrecy of the existence of the liaison 
relationship between the first two services. If, for example, the British equivalent 
of the CIA, MI-6, passed to the CIA station in London a certain piece of 
information, the CIA in turn could not pass that information to the Dutch 
Intelligence Service even though the information might be of great interest to the 
Dutch. In such a case the London station would either suggest that MI-6 pass the 
information directly to the Dutch (which may already have happened) or 
permission might be requested for the CIA itself to pass on the MI-6 information. 
In the event of a first agency agreeing that a second agency may pass information 
to a third, the first agency may not wish to be revealed to the third agency as the 
source, so that adequate concealment of the true source will be arranged. 
Sometimes it can get complicated. 



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The most important liaison operation of the CIA is with MI-6, whose 
cryptonym is SMOTH. It has been almost ten years since Burgess and Maclean 
disappeared, and SMOTH has apparently tightened its loose, 'old boy', clubby 
security practices. The inner club also includes the services of Canada, Australia 
and New Zealand although the CIA receives relatively little from these. Liaison 
with the Dutch is considered excellent because they facilitate support operations 
against targets of mutual interest, as do the Italians who tap telephones and 
intercept correspondence for the CIA station in Rome. The West German services 
are considered to be thoroughly penetrated by the Soviets while liaison with the 
French has become difficult and sensitive since the return of de Gaulle. 

In theory no operations should be undertaken by CIA stations with liaison 
services if the same operations can be mounted without the knowledge of the 
local service (excluding the UK, Canada, Australia and New Zealand). Those 
operations undertaken without the knowledge or cooperation of a liaison service, 
are called 'unilateral', whereas bilateral operations are those mounted for the CIA 
with the knowledge and support of local services. As we examine various liaison 
relationships it becomes clear that the major FI results in Western Europe come 
from local services, particularly with support operations such as travel control, 
telephone tapping, physical surveillance, postal intercepts and communist party 
penetration operations. However, in underdeveloped, less sophisticated countries, 
local services usually lack the knowledge and technical capability to mount 
effective intelligence operations. Thus the station in many cases can choose 
whether to mount joint or bilateral operations, or to undertake the operations 
without the knowledge of the local service. The decision is often based on the 
local services' internal security but also on the CIA personnel available in a given 
country; when this is limited, it can balance the scales in favour of bilateral 
operations. 

Finally, there is the matter of penetration of local services by the CI A. For 
many reasons, not the least of which is protection of the CIA itself, operational 
doctrine demands the continued effort to recruit controlled agents within liaison 
services. These agents, or prospective agents, are usually spotted by CIA officers 
assigned to work with the local service to exchange information, to train the local 
service and to work on the operations mounted by the local service to support the 
CIA. Thus a CIA station may have an information- exchange programme going 
with a local service, a joint telephone-tapping operation with the local service 
and an officer or two of the local service on the payroll as a penetration of the 



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same service. Penetration of liaison services, however, is more properly a 
counter-intelligence function. 

FI operations, then, are those undertaken to obtain information on the 
capabilities and intentions of foreign governments, especially enemy and 
unfriendly governments. Ultimately the FI collection effort is aimed at recruiting 
or placing an agent in the Kremlin with access to the decision-making process of 
the Soviet Praesidium. From that dream situation, collection operations spread 
out and down to practically all other governments and their political, scientific 
and economic secrets, and from there to the most obscure communist or other 
revolutionary grouping of the extreme left. 

As we study the different types of FI operations we engage in practical 
exercises, both here at ISOLATION and in cities near by such as Hampton, 
Norfolk, Newport News and Richmond. My main FI case has been a series of 
meetings with a leader of an opposition, nationalistic political party. I play the 
role of the station case officer under diplomatic cover while one of my instructors 
plays the foreign political leader. This is a developmental case and I have to work 
carefully to convince him that the best interests of his country and of the United 
States are so closely aligned that by helping me he will be helping his own 
country and political party. One more meeting and I'm going to offer him money. 

Camp Peary, Virginia March 1960 

Counter-intelligence (CI or KUDESK) operations differ from foreign 
intelligence collection because by definition they are defensive in nature, 
designed to protect CIA operations from detection by the opposition. The 
opposition in this sense is every intelligence and security service in the world, 
from the KGB to the municipal police in Nairobi. Since many countries separate 
their foreign intelligence service from their internal security service, much as the 
FBI is separated from the CIA, CI operations are targeted against both the foreign 
and the internal services. 

The CIA counter-intelligence function begins with the Office of Security of 
the DDS and its responsibility for physical and personnel security. By protecting 
buildings from entry by unauthorized persons and documents from perusal, the 
Office of Security serves to protect the overall CIA effort. Similarly, the lengthy 
and costly background investigations, together with the polygraph (cryptonym: 
LCFLUTTER) help to prevent the hiring of penetration agents. Continuing 



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review of the security files of CIA personnel as well as periodic LCFLUTTER 
examinations are designed to reduce the risk of continued employment in the 
CIA of employees who might have been recruited by opposition services. 

The use of cover and compartmentation also serves to protect secret 
operations by concealing the true employer of Agency members so as to prevent 
discovery, The same is true of organizations, buildings, apartments, vehicles, 
aircraft, ships and financing methods. Cover protects operations by making them 
appear to be something legitimate that in reality they are not. Compartmentation 
reduces the chance that exposure of a single operation, for whatever reason, can 
lead to the exposure of additional operations. A CIA officer or agent could gain 
knowledge of what other officers or agents were doing only if it were necessary 
for him to do so for his own work. 

Whether to use or not to use a particular prospective agent is determined, 
from the C I viewpoint, by the 'operational approval' process. It is an integral part 
of every relationship between the CIA and foreign agents no matter what a given 
agent's tasks might be. The operational approval process begins with the initial 
spotting and assessment of a prospective agent and continues through field and 
headquarters' file checks and background investigation to the operational 
approval system established in the CI staff of the DDR 

No person may be used in an operational capacity by a field station without 
prior approval by the Operational Approval Branch of the Counter-intelligence 
Staff of the DDP in headquarters (CI/OA). Requests for approval start from the 
field stations and are outlined in a document known as 'the Personal Record 
Questionnaire (PRQ) which is divided into two parts. The PRQ Part I contains 
some seven pages of basic biographical data including full name, date and place 
of birth, names of parents, names of family members, schools attended, 
employment history, marital history, military service, present and past 
citizenship, membership in political organizations, hobbies, any special 
qualifications, and use of drugs or other vices. In itself the PRQ Part I reveals no 
operational interest or plans. The PRQ Part II, which never carries the 
prospective agent's true name or other identifying, data, is a document of similar 
length with all the details of operational plans for the agent. It is reconciled with 
the PRQ Part I by a numbering system and usually bears the cryptonym assigned 
to the prospective agent. In the PRQ Part II the proposed task for the agent is 
described, the means through which the information in PRQ Part I was obtained 



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and verified is detailed, the cover used by the person who spotted and assessed 
the agent is given, and all the operational risks and advantages are discussed. 

The officers in CI/OArun a series of name checks in headquarters and, after 
studying the case, give final approval or disapproval for the proposed use of the 
prospective agent. Assuming no serious problems exist, CI/OA issues a 
Provisional Operational Approval (POA) on the agent, effective for six months, 
at the end of which an Operational Approval (OA) is issued, based on additional 
investigation by the station and the CI staff. 

Files are maintained on all agents and they always begin with the number 
201 — followed by a number of five to eight digits. The 201 file contains all the 
documents that pertain to a given agent and usually start with the PRQ and the 
request for POA. But the 201 file is divided into two parts which are stored 
separately for maximum security. One part contains true name documents while 
the other part contains cryptonym documents and operational information. 
Compromise of one part will not reveal both the true name and the operational 
use of the agent. 

In addition to the continuing station assessment and evaluation of agents 
from a C I point of view (which is to protect the Agency from hostile penetration) 
and continuing file review in headquarters, almost all agents are polygraphed 
from time to time. We call this' fluttering', from the polygraph cryptonym 
LCFLUTTER. Agents are' fluttered' by the same polygraph officers of the Office 
of Security in headquarters who interview prospective Agency employees in 
Building 13. They travel, usually, in teams of two on periodic visits to several 
countries in the same geographical area, although special trips on the spur of the 
moment can be arranged for serious cases. 

The polygraph is usually sent to field stations through the State Department 
diplomatic pouch, and is mounted snugly inside a suitcase, usually the two-suite 
size, caramel colour made by the Samsonite company. These suitcases look 
innocuous and facilitate carrying the polygraph in and out of embassies and the 
places where agents are tested. Arrangements are made for agents to be 'fluttered' 
in safe sites with interpreters as needed. The questions usually concentrate on 
whom the agent has told about his relationship with the CIA and any contacts he 
may have had with other intelligence services. The purpose of using the 'flutter' 
on agents is to root out double agents, although other matters inevitably arise 
such as honesty in reporting and in the use of money. 



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Communist Party (CP) Penetration Operations 

Communist party penetration operations are all those efforts made to 
penetrate the communist and extreme leftist revolutionary movements around the 
world. Their purpose is to collect information on the capabilities, plans, officers, 
members, weaknesses, strengths and international connections of every 
revolutionary organization outside the communist bloc. They are considered 
primarily of a counter-intelligence nature because of the conspiratorial nature of 
communism and the similarity between communists parties and hostile 
intelligence services. The focal point of headquarters for specialized skill and 
advice on CP operations is the International Communism Division of the 
Counter-intelligence Staff (CI/ICD). Although intelligence operations involving 
officials of communist-bloc countries may be included in the general definition 
of CP operations, because most government officials of interest in communist 
countries are also party members, these are more properly considered Soviet or 
satellite operations rather than CP operations. 

A CIA station's approach to penetration of a communist party or of any 
revolutionary organization is determined by the operational environment and 
particularly on the measure of repression exerted against the revolutionary left. 
Another factor of major importance is the general economic and cultural level of 
a given country which will reflect markedly on the sophistication and 
vulnerability of the revolutionary groups. As a general rule, penetration of a 
communist party is more difficult in the degree that local security forces compel 
it to operate clandestinely. If a given party is completely forced underground, for 
example, there is no obvious way of penetrating it. Similarly, recruitment is 
easier to the degree that members of the party are forced to live in penury, and 
this generally corresponds to the overall level of a country's economic 
development. A communist in La Paz will be more likely to spy for money than a 
communist in Paris. 

A proper interpretation of the operational climate is therefore an essential 
first step in any station's CP programme. Next comes the matter of studying all 
the overt material available on the party. This can be very considerable in the 
case of a large and open party such as those of Italy, and France, or very limited 
in the case of a proscribed party that operates clandestinely, as in Paraguay. Such 
a study is based on the party press, speeches by its leaders, its propaganda 



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notices, activities of front organizations and its degree of adherence to the party 
line that emanates from Moscow. 

Penetration of communist parties and other local revolutionary, organizations 
by agents are standard bread-and-butter operations of practically every CIA 
station. These agents are members of the revolutionary organizations on which 
they report through clandestine communications arrangements with the station. 
They are recruited in several ways. The first type is known as the 'walk-in'. The 
walk-in is a member of the party who, from need of money, ideological 
disillusionment or other motive decides to offer his services to the US 
government. He makes his initial contact either by walking into the US Embassy 
or Consulate or by a more discreet path designed to protect him from discovery 
and party wrath. 

It is the duty of every Chief of Station to make sure that the Embassy 
Security Officer (State Department) briefs the receptionists (usually local 
employees) and the Marine Guards about the possibility that nervous people who 
do not want to give their names may show up from time to time asking to speak 
to someone in the embassy about 'politics' or the like. In such cases, a legitimate 
State Department officer, usually in the political section, will be notified and will 
hold a private, non-committal interview letting the walk-in do most of the 
talking. In this way the station officers are protected. The interviewing officer 
will advise an officer in the station and a decision will be made about the walk- 
in's bona fides and the advisability of direct contact by a station CP officer. A file 
check and background investigation is always made before risking an initial 
contact with the walk-in, since every precaution must be taken to avoid 
provocation. 

If the walk-in looks favourable and contact is established a series of long 
sessions follow in which the walk-in details his political activities and his reasons 
for having contacted the US government. His capabilities and willingness for 
future work as a spy against the party will be determined and sooner or later he 
will be 'fluttered'. The clearance process for POA will ,be initiated and if all goes 
well secret communications are established and a new Cp penetration operation 
will be under way. 

Another way of penetrating the CP is through the non-communist who is 
recruited to join the party and work his way up from the bottom. This is a long- 
haul approach and usually undertaken only as a last resort. 



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Perhaps the most difficult is the recruitment of members of a revolutionary 
organization who are in good standing. This type of operation depends on reports 
from other CP penetration operations because extensive knowledge of the 
prospective recruit is needed to determine vulnerabilities and possibilities for 
success. CIA stations are continually engaged in trying to recruit in this manner 
and files grow thicker until a decision is made to recruit or not to recruit. 

The recruitment approach may be 'hot' or 'cold'. In the first case a station 
agent, usually not a CP penetration agent, who knows or can get to know the 
target, will make the proposition, sometimes after long periods of nurturing the 
relationship and sometimes rather quickly. The cold approach may be made by a 
CIA officer or agent, perhaps wearing a disguise or called in from a neighbouring 
country or from headquarters. He may accost the target in the street or at the 
target's home without prior personal acquaintance with him. This type of 
approach known as the' cold pitch' can backfire when knowledge of the target's 
vulnerabilities is defective, and a ready escape plan for the recruiting officer is 
advisable. 

In both the hot and the cold approaches, prior arrangements are made for 
immediate debriefing at a safe site, or for secure communications afterwards 
should the target decline at first but reconsider later. The cold approach may also 
be undertaken, on a small or large scale, by sending letters or notices to possible 
recruits advising them of interest in their political work and suggesting that they 
share it with others. A serviceable but non-compromising address such as a post- 
box in the US may be furnished as well as a separate identifying number for use 
by each prospective recruit. If the target answers by number he will be contacted 
by an officer under secure conditions. 

Finally, there is the bugging of the homes or meeting-places of party officers. 
Such operations can be mounted successfully only if considerable information is 
available on people, places and the importance of meetings. These are not always 
available, given the secrecy required of conspiratorial revolutionary activity. But 
bugging yields excellent intelligence because it lacks the human factor that may 
colour, exaggerate or otherwise distort the reports from agents. 

A station's support operations may be used to assist in the CP programme. 
Surveillance teams may discover secret meeting-places that may be bugged. 
Postal interception may provide interesting party correspondence, both from the 
national and the international mails. Observation posts may reveal participants in 
clandestine meetings or serve as listening posts for audio devices. Telephone 



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tapping can reveal voluminous information on party functionaries and the 
routines of party leaders. Surreptitious entry may produce party records and 
membership lists. 

Aside from the penetration programme directed against revolutionary 
organizations, CIA stations also direct the offensive weapons of psychological 
and paramilitary operations against them. These include the placing of anti- 
communist propaganda in the public media, the frame-up of party officials for 
police arrest, the publishing of false propaganda attributed to the revolutionary 
group in such a way that it will be difficult to deny and damaging as well, the 
organizing of goon squads to beat up and intimidate party officials, using stink 
bombs and other harassment devices to break up meetings, and the calling on 
liaison services to take desired repressive action. But we shall study these types 
of operation later. Next we are concerned with the CI aspects of liaison 
operations. 

Liaison Operations 

From the standpoint of pure doctrine all liaison operations are considered 
compromised, since even the existence of a liaison relationship implies the giving 
of something by the CIA: at the very least the identity of a CIA officer. It is 
always hoped that the virtues of liaison operations with other intelligence 
services outweigh their defects, but the judgement is sometimes hard to make. 
The two most basic principles of liaison operations from the counter-intelligence 
point of view are: first, there is no such thing as a friendly intelligence service, 
and, second, all liaison services are penetrated by the Soviets or by local 
revolutionary groups. Thus any operations undertaken jointly by the CIA with a 
liaison service are by definition compromised from the start. It is for this reason 
that some CIA intelligence reports (FIR'S) include the NOFORN or NO 
FOREIGN DISSEM indicators which restrict reports to US officials only. The 
indicators are used so that foreign liaison services will not receive information 
from sensitive sources in the course of normal exchange programmes. 

Why get involved with other services? Basically, liaison operations are 
conducted because they are useful. They extend a station's limited manpower 
however shaky the extension may be. They give the CIA a foot in the door for 
penetration of the liaison service. And they may also result in a local service 
taking action, such as an arrest or raid, at station request. 



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In non-communist countries it is the policy of the Agency to assist local 
security services to improve their capabilities if, of course, these services want 
the help and their government is not openly hostile to the US. By giving money, 
training and equipment to local services like the police, the CIA is able to receive 
information that might otherwise not be available because, for example, of the 
shortage of station officers. Travel control, for instance, involves obtaining airline 
and ship passenger lists from the companies or from local immigration services. 
Often it is easier to obtain them from a liaison service than from five or ten 
different companies. Telephone tapping is often possible only through a local 
service, especially when many lines are to be monitored. Mails can be opened 
much more easily by a local service than by the lengthy process of unilateral 
agent recruitment in post offices. Above all, if flaps (scandals) occur, the local 
service, not the CI A, will take the rap. 

Usually a Chief of Station will handle the contact with the chief of a local 
service. Some stations may have whole sections of liaison officers at the working 
level both in operational planning and in information exchange. The general rule, 
of course, is to expose the absolute minimum of station officers to a local service 
and, if possible, only those officers engaged in liaison operations. Officers 
engaged in unilateral operations, that is, operations undertaken without the 
knowledge of the local government, should be protected against compromise 
with the local service. 

Some local services are so pitifully backward that they need overt US 
government assistance. Thus the International Cooperation Administration (ICA) 
[10] technical assistance missions in many countries include Public Safety 
Missions made up of US technicians who work with police departments. They 
seek to improve the local service's capability in communications, investigations, 
administration and record keeping, public relations and crime prevention. The 
Public Safety Missions are valuable to the CIA because they provide cover for 
CIA officers who are sent to work full time with the intelligence services of the 
police and other civilian services. Station officers under other cover may work 
with military intelligence and, at times, officers undercover as businessmen, 
tourists or retired people may be assigned to work with local services. 

CIA assistance to local services through Public Safety Missions or other 
forms of cover are not only designed to help improve the professional capability 
of the local service. Operational targeting of the local service is guided by CIA 
liaison officers so that the local service performs tasks that are lacking in the 



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overall station operational programme. In other words local services are to be 
used for the benefit of the CIA, and this includes keeping the local service away 
from station unilateral operations. 

The personal relations between CIA liaison officers and their colleagues in 
local services are very important, because the CIA liaison officers are expected to 
spot and assess officers in the local service for recruitment as penetration agents. 
Liaison officers make money available to officers of the local service and it is 
expected that the local colleague will pocket some of the money even though it is 
supposed to be strictly for operations. The technique is to get the local police or 
intelligence officer used to a little extra cash so that not only will he be dependent 
on the station for equipment and professional guidance but also for personal 
financing. 

Security officers such as police are often among the poorest paid public 
servants and they are rarely known to refuse a gift. Little by little an officer of a 
local service is called upon to perform tasks not known to anyone else in his 
service, particularly his superiors. Gradually he begins to report on his own 
service and on politics within his own government. Eventually his first loyalty is 
to the CIA. After all, that is where the money comes from. Penetration operations 
against local services are often of very considerable importance because of the 
place of security services in local political stability. Reporting from these agents 
is sometimes invaluable during situations of possible coup d'etat. 

Finally, CIA stations may undertake unilateral operations through officers of 
liaison services who have been recruited as penetration agents. That is the final 
goal. Recruited liaison officers may also report on efforts by their services to 
uncover unilateral station operations. This, too, is a happy situation. 

Soviet/Satellite Operations 

Operations against the Soviets and the satellite governments are designed to 
produce, in the long run, positive information as opposed to counter-intelligence. 
But both types of information, FI and CI, are so intertwined that they are 
practically inseparable in specific operations. The reason is that operations are 
extremely difficult to mount inside the target countries because of the 
effectiveness of the communist internal security services. Those that do originate 
within the Soviet Union or the satellites are usually surprise offers of services 
that have little to do with targeting, spotting, assessment and recruitment. Rather 



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they are the result of inner processes hidden somewhere in the psyches of 
communist officials which surface at an unpredictable moment of strain. In 
effect, these people usually recruit themselves. 

On the other hand, access to Soviet and East European officials outside the 
communist bloc is relatively easy and an elaborate operational method for 
attacking them has developed in the CIA over the years. The operations that 
result from this are generally more of a CI than an FI type, that is, they reflect 
more of the protective function than the collection of intelligence information, 
although they are in no way lacking in aggressive character. 

The first rule is that all the bordering property around a Soviet embassy 
should be considered for purchase by station support agents. The most 
appropriate and the most promising of these properties will be purchased and 
kept available for use whenever needed. As Soviet embassies are often sizeable 
plots of land with large mansions and surrounded by high walls, there may be as 
many as seven or eight houses contiguous with the Soviet property. These houses 
may be used as visual observation posts and for the setting up of technical 
collection equipment. For example, when the Soviets are known or suspected to 
be using electronic encrypting machines, radiations emanating from them may be 
captured, enabling the message to be decrypted. Such an operation is undertaken 
in support of the National Security Agency. But observation posts are more 
routinely used for identifying, by associations, the KGB and GRU (military 
intelligence) residences within the Soviet mission as well as the general pecking 
order in the Soviet colony. 

Wherever possible all the entrances to the Soviet compound as well as the 
gardens within are placed under visual observation. Such coverage may 
necessitate as many as three or four observation posts. Each OP is manned by 
agents, often elderly couples, who maintain a log of the comings and goings of 
every Soviet employee as well as those taking part in, and characteristics of, the 
frequent garden conversations. Photography is frequently used to get up-to-date 
photos of Soviet personnel as well as for less successful purposes as close-up 
movies shot of garden conversations and passed to Russian lip-readers. The logs 
from the observation posts are studied with the transcripts of telephone tapping, 
which is standard operational practice against all Soviet and satellite missions 
outside the bloc together with the transcriptions of bugging operations against 
their installations, if bugging has been possible. From these studies the functional 
duties within the Soviet colony are revealed and the daily routines of everyone 



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become fundamental operating knowledge of the CIA Soviet and satellite 
operations officers. 

Coverage of Soviet and satellite officers begins, however, long before they 
arrive in a foreign country. Almost always the first notice of a new arrival results 
from the visa request made by the Soviet Foreign Ministry to the embassy of the 
country concerned in Moscow. The visa may be granted by the embassy, which 
will advise its own Foreign Ministry, or the request will be transmitted to the 
Foreign Ministry for approval. These communications are often made in coded 
diplomatic messages. The CIA station in the capital city where the Soviet is to be 
posted receives the decrypted messages from the National Security Agency via 
headquarters where file checks immediately start on the Soviet official in 
question. Thus if the Soviet Foreign Ministry requests from the Indian Embassy 
in Moscow, a diplomatic visa for Ivan Ivanovitch the CIA station in New Delhi 
may receive its first indication of the assignment through the monitoring of 
Indian government communications. 

Before the Soviet arrives the station will have all the available information 
on him and his family together with photographs if possible. The information 
would have been collected and filed from coverage of the Soviet (or satellite) 
officer on previous tours of duty abroad, from defector debriefmgs, from 
communications intelligence and from other miscellaneous sources. When no 
traces exist a new file is opened and the target's history with the CIA begins. 

The final purpose of the operations is to recruit Soviet and satellite officials 
as agents for spying and this can be done only by getting to know them. In this 
work the 'access agent' is the station's most sensitive and effective means of 
obtaining data on target officials. Access agents are people who, for a great 
variety of reasons, can establish a personal relationship with a Soviet or satellite 
officer and through whom the CIA can observe the officer as closely as possible. 
The access agent can also guide conversations very carefully to selected topics so 
as to discover weakening beliefs, character defects, personal problems and basic 
likes and dislikes. Sometimes an access agent's role may change to that of double 
agent if the Soviet attempts to recruit him, but double-agent operations are 
discouraged except in special circumstances because there are too many 
problems in the continual need to be certain that the agent has not been doubled 
back against the CI A. An access agent may be anyone so long as the target 
official can be kept interested: a host country Foreign Ministry official, a third 



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country diplomat, someone who shares the same hobby, a man with an attractive 
wife. 

In most countries the foreign diplomats have a club with monthly luncheons, 
dinners and excursions. State Department and CIA officers under State cover are 
members of these clubs and can thereby develop personal relationships with 
Soviet officials. The Ambassador's permission is necessary for a station to guide 
a State Department officer in a personal relationship with a communist diplomat, 
who is almost always an intelligence officer, and at times CIA officers 
themselves develop personal relationships with communist officials. But such 
relationships are usually not as productive as the personal relations developed by 
access agents, with whom the target official may relax and let down his guard. 

Soviet and satellite embassies usually employ a small number of local people 
as gardeners, cleaners and occasionally as chauffeurs. These people are always 
screened by the embassy for loyalty to communism, but sometimes they too can 
be recruited by the CIA. They have very little physical access to embassy offices 
so they usually cannot plant listening devices, but they can report interesting 
information on superior-inferior relationships, gossip and back-biting, wives and 
children and visitors to the embassies. 

The bugging of Soviet and satellite official installations abroad is a very high 
priority but possible only in rare circumstances such as when a defector can plant 
a device after contact with the CIA but before disappearing. However, as the 
Soviets, satellites and Chinese expand their diplomatic and commercial relations 
around the world, they always need buildings. From the moment a preliminary 
mission by a communist country is planned, the CIA station brings everything to 
bear in order to discover the buildings selected and, during the period before 
occupancy, every effort is made to install listening devices. Soviet and satellite 
officials usually live in embassies, consulates or other official buildings with 
their families or alone, but a few live in apartment buildings. Their apartments 
are also bugged whenever there is reason to believe intelligence of value can be 
obtained. 

Almost all CIA stations have surveillance teams equipped with cameras, 
vehicles and radio communications. Their primary targets are known Soviet and 
satellite intelligence officers and efforts are made to discover through the 
surveillance teams the operational habits, and, with luck, the clandestine contacts 
of the communist officer. 



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Soviet operations are closely controlled by the Soviet Russia (SR) Division 
of the DDP in headquarters. They are the specialists and much operational 
correspondence on Soviet operations bears the cryptonym REDWOOD, 
indicating SR Division action and control. In certain cases, however, the 
indicator may be REDCOAT which means action and control by the area division 
concerned. SR Division also coordinates a number of other operations that have 
world-wide significance. 

The RED SOX programme of illegal infiltration of agents into the Soviet 
Union and satellite countries had started during the early 1950s but failed 
miserably. It is still conducted, however, when the need is great and when a 
Russian emigre with suicidal tendencies can be found. The REDSKIN 
programme of legal travellers, on the other hand, has been highly successful even 
though several agents have been lost. This programme includes tourists, 
businessmen, scientists, journalists and practically anyone who can obtain legal 
entry into the Soviet Union or the satellites and who is willing to perform 
operational tasks. 

Then there is the REDCAP programme which is a machine-listing system of 
all Soviet nationals who travel abroad: scientists, technicians, military advisors 
and commercial officers as well as diplomats. Intelligence officers, of course, use 
all of these types of cover. The ZOMBIE listings are also machine runs, listing all 
non- Soviet/satellite nationals who travel to the bloc, and the ZODIAC machine 
programme lists travel of citizens of satellite countries to the West. SR Division 
activities are particularly intense at international scientific and technical 
congresses, and prior notices are sent to stations around the world describing the 
meetings and requesting station nominees to attend the meetings and establish 
contact with Soviet or satellite colleagues. 

Our instructors here, and the visiting lecturers from SR and EE Divisions, 
freely admit that the communist intelligence services have discovered numerous 
examples of all categories of operation against them. Thus they are aware of our 
methods. Nevertheless; the leaders of the Soviet Russia Division keep driving 
home the theme that the Soviets are the only nation on earth with the capability 
and the avowed intention of destroying the United States of America. This alone 
requires every possible effort to carry the attack to the enemy. 

Practical exercises continue. We've been spending about one afternoon per 
week in near-by towns practising surveillance and having 'agent meetings' with 
instructors. My liaison case was to convince the officer of the sister service to 



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accept money for personal expenses and to begin performing tasks for me 
without the knowledge of his superiors. The communist party penetration 
exercise was focused on building up the 'agent's morale' and encouraging him to 
take a more active role in the party work he despises. The Soviet operation was a 
series of developmental meetings with a 'third country' diplomat (in my case an 
Indian) leading to his recruitment as an access agent to a KGB officer. I also had 
a legal travel case in which I recruited a reluctant American scientist who was to 
attend a scientific conference. Then we had a series of briefing and debriefing 
sessions before and after his trip. His main task was to befriend a Soviet 
colleague who we know has access to sensitive military information. Hopefully 
they will meet at future conferences and eventually my agent will recruit the 
Soviet scientist. 

Camp Peary, Virginia April 1960 

Psychological and paramilitary, known as PP or KUCAGE, operations differ 
from those of FI or CI because they are action rather than collection activities. 
Collection operations should be invisible so that the target will be unaware of 
them. Action operations, on the other hand, always produce a visible effect. This, 
however, should never be attributable to the CIA or to the US government, but 
rather to some other person or organization. These operations, which received 
their Congressional charter in the National Security Act of 1 947 under 'additional 
services of common concern', are in some ways more sensitive than collection 
operations. They are usually approved by the PP staff of the DDP, but when very 
large amounts of money are required or especially sensitive methods are used 
approval may be required of the OCB (Under- Secretary level), the NSC or the 
President himself. 

PP operations are, of course, risky because they nearly always mean 
intervention in the affairs of another country with whom the US enjoys normal 
diplomatic relations. If their true sponsorship were found out the diplomatic 
consequences could be serious. This is in contrast to collection operations, for if 
these are discovered foreign politicians are often prepared to turn a blind eye — 
they are a traditional part of every nation's intelligence activity. 

Thus the cardinal rule in planning all PP operations is 'plausible denial', only 
possible if care has been taken in the first place to ensure that someone other than 
the US government can be made to take the blame. 



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PP programmes are to be found in almost every CIA station and emphasis on 
the kinds of PP operations will depend very much on local conditions. 
Psychological warfare includes propaganda (also known simply as 'media '), 
work in youth and student organizations, work in labour organizations (trade 
unions, etc.), work in professional and cultural groups and in political parties. 
Paramilitary operations include infiltration into denied areas, sabotage, economic 
warfare, personal harassment, air and maritime support, weaponry, training and 
support for small armies. 

Media Operations 

The CIA'S role in the US propaganda programme is determined by the 
official division of propaganda into three general categories: white, grey and 
black. White propaganda is that which is openly acknowledged as coming from 
the US government, e.g. from the US Information Agency (USIA); grey 
propaganda is ostensibly attributed to people or organizations who do not 
acknowledge the US government as the source of their material and who produce 
the material as if it were their own; black propaganda is unattributed material, or 
it is attributed to a non-existent source, or it is false material attributed to a real 
source. The CIA is the only US government agency authorized to engage in black 
propaganda operations, but it shares the responsibility for grey propaganda with 
other agencies such as USIA. However, according to the 'Grey Law' of the 
National Security Council contained in one of the NSCID'S, other agencies must 
obtain prior CIA approval before engaging in grey propaganda. 

The vehicles for grey and black propaganda may be unaware of their CIA or 
US government sponsorship. This is partly so that it can be more effective and 
partly to keep down the number of people who know what is going on and thus to 
reduce the danger of exposing true sponsorship. Thus editorialists, politicians, 
businessmen and others may produce propaganda, even for money, without 
necessarily knowing who their masters in the case are. Some among them 
obviously will and so, in agency terminology, there is a distinction between 
'witting' and 'unwitting' agents. 

In propaganda operations, as in all other PP activities, standard agency 
security procedure forbids payment for services rendered to be made by a CIA 
officer working under official cover (one posing as an official of the Department 
of State, for instance). This is in order to maintain 'plausible denial' and to 



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minimize the danger of embarrassment to the local embassy if anything is 
discovered by the local government. However, payment is made by CIA officers 
under non-official cover, e.g. posing as businessmen, students or as retired 
people; such officers are said to be working under non-official cover. 

Officers working under non-official cover may also handle most of the 
contacts with the recruited agents in order to keep the officer under official cover 
as protected as possible. Equally, meetings between the two kinds of officer will 
be as secret as may be. The object of all this is to protect the embassy and 
sometimes to make the propaganda agents believe that they are being paid by 
private businesses. 

Headquarters' propaganda experts have visited us in ISOLATION and have 
displayed the mass of paper they issue as material for the guidance of propaganda 
throughout the world. Some of it is concerned only with local issues, the rest 
often has world-wide application. The result of the talks was to persuade most of 
us that propaganda is not for us — there is simply too much paperwork. But 
despite that, the most interesting part of propaganda was obviously the business 
of orchestrating the treatment of events of importance among several countries. 
Thus problems of communist influence in one country can be made to appear of 
international concern in others under the rubric of 'a threat to one is a threat to 
all'. For example, the CIA station in Caracas can cable information on a secret 
communist plot in Venezuela to the Bogota station which can 'surface' through a 
local propaganda agent with attribution to an unidentified Venezuelan 
government official. The information can then be picked up from the Colombian 
press and relayed to CIA stations in Quito, Lima, La Paz, Santiago and, perhaps, 
Brazil. A few days later editorials begin to appear in the newspapers of these 
places and pressure mounts on the Venezuelan government to take repressive 
action against its communists. 

There are obviously hosts of other uses to which propaganda, both black and 
grey, can be put, using books, magazines, radio, television, wall-painting, 
handbills, decals, religious sermons and political speeches as well as the daily 
press. In countries where handbills or wall-painting are important media, stations 
are expected to maintain clandestine printing and distribution facilities as well as 
teams of agents who paint slogans on walls. Radio Free Europe J (RFE) and 
Radio Liberty J are the best known grey-propaganda operations conducted by the 
CIA against the Soviet bloc. 



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Youth and Student Operations 

At the close of World War II, the Communist Party of the Soviet Union 
began a major propaganda and agitation programme through the formation of the 
International Union of Students (IUS) and the World Federation of Democratic 
Youth (WFDY), both of which brought together national affiliates within their 
respective fields in as many countries as possible. These organizations promoted 
CPSU objectives and policy under the guise of unified campaigns (anti- 
colonialism, anti-nuclear weapons, pro-peace groups, etc.), in which they enlisted 
the support of their local affiliates in capitalist countries as well as within the 
communist bloc. During the late 1940s the US government, using the Agency for 
its purpose, began to brand these fronts as stooges of the CPSU with the object of 
discouraging non-communist participation. In addition to this the Agency 
engaged in operations in many places designed to stop local groups affiliating 
with the international bodies. By recruiting leaders of the local groups and by 
infiltrating agents, the Agency tried to gain control of as many of them as 
possible, so that even if such a group had already affiliated itself to either the IUS 
or the WFDY, it could be persuaded or compelled to withdraw. 

The Agency also began to form alternative youth and student organizations at 
local and international level. The two international bodies constructed to rival 
those sponsored by the Soviet Union were the Coordinating Secretariat of 
National Unions of Students J (COSEC) [11] with headquarters in Leyden, and 
the World Assembly of Youth J (WAY) situated in Brussels. Headquarters' 
planning, guidance and operational functions in the CIA youth and student 
operations are centralized in the International Organizations Division of the DDP. 

Both COSEC and WAY, like the IUS and WFDY, promote travel, cultural 
activities and welfare, but both also work as propaganda agencies for the CIA — 
particularly in underdeveloped countries. They also have consultative status as 
non-governmental institutions with United Nations agencies such as UNESCO 
and they participate in the UN special agencies' programmes. 

One very important function of the CIA youth and student operations is the 
spotting, assessing and recruiting of student and youth leaders as long-term 
agents, both in the FI and PP fields. The organizations sponsored or affected by 
the Agency are obvious recruiting grounds for these and, indeed, for other CIA 
operations. It is particularly the case in the underdeveloped world that both 
COSEC and WAY programmes lead to the recruitment of young agents who can 



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be relied on to continue CIA policies and remain under CIA control long after 
they have moved up their political or professional ladders. 

Apart from working through COSEC and WAY the Agency is also able to 
mount specific operations through Catholic national and international student and 
youth bodies (Pax Romana and the International Catholic Youth Federation) and 
through the Christian democratic and non-communist socialist organizations as 
well. In some countries, particularly those in which there are groups with strong 
communist or radical leaderships, the Catholic or Christian Democratic student 
and youth organizations are the main forces guided by the Agency. 

Agents controlled through youth and student operations by a station in any 
given country, including those in the US National Students Association J (NSA) 
international programme run by headquarters, can also be used to influence 
decisions at the international level, while agents at the international level can be 
used for promoting other agents or policies within a national affiliate. Control, 
then, is like an alternating current between the national and international levels. 

Largely as a result of Agency operations, the WFDY headquarters was 
expelled from France in 1951, moving to Budapest. The IUS headquarters, on the 
other hand, was never allowed to move to the free world after its founding at 
Prague in 1946. Moreover, the WFDY and IUS have been clearly identified with 
the communist bloc, and their efforts to conduct conferences and seminars 
outside the bloc have been attacked and weakened by WAY and COSEC. The 
WFDY, for example, has been able to hold only one World Youth Festival outside 
the bloc, in Vienna in 1959, and then it was effectively disrupted by CIA- 
controlled youth and student organizations. The IUS has never held a congress in 
the free world. More important still, both WAY and COSEC have developed 
overwhelming leads in affiliate members outside the communist bloc. 

Labour Operations 

Agency labour operations came into being, like student and youth operations, 
as a reaction against the continuation of pre-World War II CPSU policy and 
expansion through the international united fronts. In 1945 with the support and 
participation of the British Trade Unions Congres (TUC), the American Congress 
of Industrial Organizations (CIO) and the Soviet Trade Unions Council, the 
World Federation of Trade Unions (WFTU) was formed in Paris. Differences 
within the WFTU between communist trade-union leaders, who were anxious to 



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use the WFT U for anti-capitalist propaganda,, and free-world leaders who 
insisted on keeping the WFTU focused on economic issues, finally came to a 
head in 1949 over whether the WFTU should support the Marshall Plan. When 
the communists, who included French, Italian and Latin American leaders as well 
as the Soviets, refused to allow the WFTU to endorse the Marshall Plan, the TUC 
and CIO withdrew, and later the same- year the International Confederation of 
Free Trade Unions (ICFTU J) was founded as a noncommunist alternative to the 
WFTU, with participation by the TUC, CIO, American Federation of Labor 
(AFL) and other national centres. Agency operations were responsible in part for 
the expulsion of the WFTU headquarters from Paris in 1951 when it moved to 
the Soviet sector of Vienna. Later, in 1956, it was forced to move from Vienna to 
Prague. 

The ICFTU established regional organizations for Europe, the Far East, 
Africa and the Western Hemisphere, which brought together the non-communist 
national trade -union centres. Support and guidance by the Agency was, and still 
is, exercised on the three levels: ICFTU, regional and national centres. At the 
highest level, labor operations congenial to the Agency are supported through 
George Meany, J President of the AFL, Jay Lovestone, J Foreign Affairs Chief of 
the AFL and Irving Brown, J AFL representative in Europe — all of whom were 
described to us as effective spokesmen for positions in accordance with the 
Agency's needs. Direct Agency control is also exercised on the regional level. 
Serafmo Romualdi, } AFL Latin American representative for example, directs the 
Inter-American Regional Labor Organization (ORIT) } located in Mexico City. 
On the national level, particularly in underdeveloped countries, CIA field stations 
engage in operations to support and guide national labour centres. In 
headquarters, support, guidance and control of all labour operations is centralized 
in the labour branch of the International Organizations Division. 

General policy on labour operations is similar to youth and student 
operations. First, the WFTU and its regional and national affiliates are labelled as 
stooges of Moscow. Second, local station operations are designed to weaken and 
defeat communist or extreme-leftist dominated union structures and to establish 
and support a non-communist structure. Third, the ICFTU and its regional 
organizations are promoted, both from the top and from the bottom, by having 
Agency-influenced or controlled unions and national centres affiliate. 

A fourth CIA approach to labour operations is through the International Trade 
Secretariats J (ITS), which represent the interests of workers in a particular 



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industry as opposed to the national centres that unite workers of different 
industries. Because the ITS system is more specialized, and often more effective, 
it is at times more appropriate for Agency purposes than the ICFTU with its 
regional and national structure. Control and guidance is exercised through 
officers of a particular ITS who are called upon to assist labour operations 
directed against the workers of a particular industry. Very often the CIA agents in 
an ITS are the American labour leaders who represent the US affiliate of the ITS, 
since the ITS would usually receive its principal support from the pertinent US 
industrial union. Thus the American Federation of State, County and Municipal 
Employees } serves as a channel for CIA operations in the Public Service 
International, J which is the ITS for government employees headquartered in 
London. And the Retail Clerks International Association, J which is the US union 
of white-collar employees, gives access to the International Federation of 
Clerical and Technical Employees, J which is the white-collar ITS. Similarly, the 
Communications Workers of America } is used to control the Post, Telegraph and 
Telephone Workers International J (PTTI) which is the ITS for communications 
workers. In the case of the petroleum industry the Agency actually set up the ITS, 
the International Federation of Petroleum and Chemical Workers J (IFPCW) 
through the US union of petroleum workers, the Oil Workers International Union. 
Particularly in underdeveloped countries, station labour operations may be given 
cover as a local programme of an ITS. Within the Catholic trade -union 
movement similar activity is possible, usually channelled through the 
International Federation of Christian Trade Unions } (IFCTU). [12] And for 
specialized training within the social-democratic movement, the Israeli Histadrut 
J is used. 

Labour operations are the source of considerable friction between the DDP 
area divisions and the stations, on the one hand, and the International 
Organizations Division (IOD) on the other. The problem is mainly jurisdiction 
and coordination. The labour operations agents on the international and regional 
level (ICFTU, OR1T, ITS, for example) are directed by officers of IOD either in 
Washington or from a field station such as Paris, Brussels or Mexico City. If their 
activities in a particular country, Colombia, for example, are not closely 
coordinated with the Bogota station, they may oppose or otherwise interfere with 
specific aims of the Bogota station's labour operations or other programmes. 
Whenever IOD labour assets visit a given country, the Chief of Station who is 
responsible for all CIA activities in his country, must be advised. Otherwise the 



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IOD agent, lacking the guidance and control that would ensure that his activities 
harmonize with the entire station operational programme, not just in the labour 
field, may jeopardize other station goals. Continuing efforts are made to ensure 
coordination between IOD activities in labour and the field stations concerned, 
but this is also hampered at times by the narrow view and headstrong attitudes of 
the agents themselves. 

On the other hand, IOD agents can be enormously valuable in assisting a 
local station's labour programme. Usually the agent has considerable prestige as a 
result of his position on the international or regional level, and his favour is often 
sought by indigenous labour leaders because of the travel and training grants and 
invitations to conferences that the agent dispenses. He accordingly has ready 
access to leaders in the local non-communist labour movement and he can 
establish contact between the station and those local labour leaders of interest. 
Such contact can be established through third parties, gradually, so that the IOD 
agent is protected when a new operational relationship is eventually established. 
Field stations may call on IOD support in order to obtain the adoption of a 
particular policy or programme in a given country through the influence that an 
IOD agent can bring to bear on a local situation, again without the local labour 
leader, even if he is a station agent, knowing that the international or regional 
official is responding to CIA guidance. 

Measuring the effectiveness of labour operations against their multi-million- 
dollar cost is difficult and controversial, and includes the denial-to-the- 
communists factor as well as the value of indoctrination in pro-Western ideals 
through seminars, conferences and educational programmes. In any case, free- 
world affiliation with the WFTU has been considerably reduced, even though 
several leading national confederations in non-communist countries still belong. 

Operations against the World Peace Council 

Agency operations against the World Peace Council (founded in Paris in 
1949) are undertaken to neutralize the Council's propaganda campaigns against 
the US and its allies, particularly with regard to military pacts. Although no rival 
organization has been established, media operations are directed against WPC 
activities in order to expose its true sponsorship as a propaganda front of the 
CPSU. Some success can be claimed in the expulsion of WPC headquarters from 
Paris to Prague in 1951 although it moved to Vienna in 1954. Efforts are also 



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made to prevent the WPC from holding congresses and other meetings outside 
the communist bloc through operations involving media, students, youth, labour 
and especially political-action agents for denial of permissions and other 
harassment. 

Journalists 

Founded in Copenhagen in 1946, the International Organization of 
Journalists (IOJ) brought together writers from both communist and non- 
communist countries. Although the original headquarters of the IOJ was in 
London, the Second Congress was held in Prague in 1947 where it was decided 
to move the IOJ headquarters. Following the leadership of the national 
journalists' organizations of the United States, Great Britain and Belgium, most 
non-communist membership had been withdrawn by 1 950, and its activities were 
generally confined to Iron Curtain countries. 

In addition to propaganda against the IOJ and operations to deny Western 
capitals for IOJ meetings, the Agency promoted the founding of an alternative 
international society of journalists for the free world. In 1952 the World Congress 
of Journalists reestablished the International Federation of Journalists % (IFJ) 
which had been founded originally in 1926, but had been disbanded in 1946 
when the IOJ was formed. 

Benefits to the Agency from the IFJ operation include the spotting and 
operational development of potential propaganda agents. Moreover, local station 
support to IFJ member organizations can be used to combat the local communist 
and procommunist press and the efforts at penetration by the IOJ. especially in 
underdeveloped countries. 

Lawyers 

In 1946 the International Association of Democratic Lawyers (IADL) was 
founded in Paris with the participation of lawyers from some twenty-five 
countries. Dominated from the beginning by pro-communist forces, especially 
the French participants, the IADL soon lost most of its non-communist members 
and in 1950 was expelled from France, moving its headquarters to Brussels 
where it has remained. The IADL'S main function has been to serve as a 



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propaganda mechanism for the CPSU post-war themes of peace and anti- 
colonialism. 

In 1952, an international legal conference was held in West Berlin from 
which a permanent committee emerged to carryon the work of exposing 
communist injustice in East Germany. In 1955 this committee became the 
International Commission of Jurists (ICJ) with headquarters in The Hague, 
moving to Geneva in 1959. The ICJ is composed of twenty-five prominent 
lawyers from countries around the world, and its main work consists of 
investigating and reporting on abuses of the 'rule of law', wherever they occur. 

The Agency saw the ICJ as an organization which it hoped would produce 
prestigious propaganda of the kind wanted on such issues as violations of human 
rights in the communist bloc. Reports on other areas like South Africa would, so 
far as the CIA was concerned, merely lend respectability to this object. 

Political-Action Operations 

Communist expansion brought forth still another type of PP operation: 
political action. Operations designed to promote the adoption by a foreign 
government of a particular policy vis-a-vis communism are termed political- 
action operations. While the context of these operations is the assessment of the 
danger of communist or other leftist influence in a given country, the operations 
undertaken to suppress the danger are pegged to specific circumstances. These 
operations often involve promotion through funding and guidance of the careers 
of foreign politicians through whom desired government policy and action can be 
obtained. Conversely, these operations often include actions designed to 
neutralize the politicians who promote undesirable local government policy 
regarding communism. 

Although political-action operations after World War II began with electoral 
funding of anti-communist political parties in France and Italy in the late 1940s, 
they are now prevalent in the underdeveloped countries where economic and 
social conditions create a favourable climate for communist advance. The 
obvious human elements in political-action operations are political parties, 
politicians and military leaders, although agents in other PP operations including 
labour, student and youth, and' media are often brought to bear on specific 
political-action targets. 



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In order to obtain political intelligence as well as to develop relationships 
with potential political-action agents, most stations have continuing programmes 
for cultivating local politicians from opposition as well as from government 
parties. Making acquaintances in local politics is not usually difficult because 
CIA officers under diplomatic cover in embassies have natural access to their 
targets through cocktail parties, receptions, clubs and other mechanisms that 
bring them together with people of interest. Regular State Department Foreign 
Service Officers and Ambassadors as well may also facilitate the expansion of 
station political contacts through arranging introductions. When a local political 
contact is assessed favourably for station' goals, security clearance and 
operational approval is obtained from headquarters, and the station officer in 
contact with the target begins to provide financial support for political campaigns 
or for the promotion of the target's political group or party. Hopefully, almost 
surely, the target will use some of the money for personal expenses thereby 
developing a dependency on the station as a source of income. Eventually, if all 
goes well, the local politician will report confidential information on his own 
party and on his government, if he has a government post, and he will respond to 
reasonable station direction regarding the communist question. 

A station's liaison operations with local security services are also a valuable 
source of political-action assets. Because of frequent political instability in 
underdeveloped countries, the politicians in charge of the civilian and military 
security forces are in key positions for action as well as for information, and they 
are often drawn into an operational relationship with the station when they enter 
office merely by allowing ongoing liaison operations to continue. They are 
subjected to constant assessment by the station for use in political action and 
when deemed appropriate they may be called upon for specific tasks. Financial 
support is also available for furthering their political careers and for a continuing 
relationship once they leave the ministry. 

As final arbiters of political conflicts in so many countries, military leaders 
are major targets for recruitment. They are contacted by station officers in a 
variety of ways, sometimes simply through straightforward introduction by US 
military attaches or the personnel of US Military Assistance Missions. 
Sometimes the liaison developed between the Agency and local intelligence 
services can be used for making these contacts. Again CIA officers can make 
contact with those military officers of other countries who come to the US for 
training. As in the case of politicians, most Agency stations have a continual 



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programme for the development of local military leaders, both for the collection 
of intelligence and for possible use in political action. 

The political actions actually undertaken by the Agency are almost as varied 
as politics itself. High on the list of priorities is the framing of Soviet officials in 
diplomatic or commercial missions in order to provoke their expulsion. 
Politicians working for the Agency are expected to take an active part in working 
for expulsion of 'undesirables'. Similarly, where the Soviet Union tries to extend 
its diplomatic or commercial activities, our politicians are expected to use their 
influence to oppose such moves. They are also expected to take a hard line 
against their own nationals engaged in left-wing or communist activities. In the 
last of these instances success means the proscription of the parties, the arrest or 
exile of their leaders, the closure of their offices, publications and bookstores, the 
prohibition of their demonstrations, etc. Such large-scale programmes call for 
action both by anticommunist movements and by national governments — where 
possible the Agency likes to use the same political-action agents for both 
purposes. 

But it is not just a matter of financing and guiding local politicians. In 
situations regarded as dangerous to the US, the Agency will conduct national 
election operations through the medium of an entire political party. It will finance 
candidates who are both 'witting' and 'unwitting'. Such multi-million-dollar 
operations may begin a year or more before an election is due and will include 
massive propaganda and public -relations campaigns, the building of numerous 
front organizations and funding mechanisms (often resident US businessmen), 
regular polls of voters, the formation of goon-squads' to intimidate the 
opposition, and the staging of provocations and the circulation of rumours 
designed to discredit undesirable candidates. Funds are also available for buying 
votes and vote counters as well. 

If a situation can be more effectively retrieved for US interests by 
unconstitutional methods or by coup d'etat, that too may be attempted. Although 
the Agency usually plays the anti-communist card in order to foster a coup, gold 
bars and sacks of currency are often equally effective. In some cases a timely 
bombing by a station agent, followed by mass demonstrations and finally by 
intervention by military leaders in the name of the restoration of order and 
national unity, is a useful course. Agency political operations were largely 
responsible for coups after this pattern in Iran in 1953 and in the Sudan in 1958. 



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Paramilitary Operations 

At times the political situation in a given country cannot be retrieved fast or 
effectively enough through other types of PP operations such as political action. 
In these cases the Agency engages in operations on a higher level of conflict 
which may include military operations — although these should not be seen as 
US-sponsored. These unconventional warfare operations are called paramilitary 
operations. The Agency has the charter from the National Security Council for 
US government unconventional warfare although the military services also 
sustain a paramilitary capability in case of general war. These operations seem to 
hold a special fascination, calling to mind ass heroism, resistance, guerrilla 
warfare, secret parachute jumps behind the lines. Camp Peary is a major Agency 
training base for paramilitary operations. 

The need for getting agents into denied areas like certain parts of the Soviet 
Union, China and other communist countries, is satisfied in part by illegal 
infiltration by land, sea or air. The agents, usually natives of the denied area, are 
given proper clothing, documentation and cover stories and, if infiltrating by 
land, may be required to pass secretly through heavily guarded borders. Training 
in border crossing is given in a restricted area of Camp Peary where a mile or so 
of simulated communist borders is operated with fences, watch-towers, dogs, 
alarms and patrols. Maritime infiltration involves the use of a mother ship, 
usually a freighter operated by an Agency cover shipping company which 
approaches to within a few miles of the shore landing-site. An intermediate craft, 
often a souped-up outboard, leaves the mother ship and approaches to perhaps a 
mile off the shore where a rubber boat with a small silent outboard is inflated to 
carry the infiltration team to the beach. The rubber boat and auxiliary equipment 
is buried near the beach for use later in escape while the intermediate craft 
returns to the mother ship. Infiltration by air requires black overflights for which 
the Agency has unmarked long- and short-range aircraft including the versatile 
Helio Courier that can be used in infil-exfil operations with landings as well as 
parachute drops. Restricted areas of Camp Peary along the York River are used 
for maritime training and other parts of the base serve as landing-sites and drop 
zones. 

Once safely infiltrated to a denied area, a lone agent or a team may be 
required to perform a variety of jobs. Frequently an infiltration team's mission is 
the caching of weapons, communications equipment or sabotage materials for 



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later retrieval by a different team which will use them. Or, an infiltration team 
may perform sabotage through the placing of incendiary devices or explosives at 
a target-site timed to go off days, weeks or even months later. Sabotage weapons 
include oil and gasoline contaminates for stopping vehicles, contaminates for 
jamming printing- presses, limpets for sinking ships, explosive and incendiary 
compounds that can be moulded and painted to look like bread, lamps, dolls or 
stones. The sabotage instructors, or 'burn and blow boys', have staged impressive 
demonstrations of their capabilities, some of which are ingeniously designed so 
as to leave little trace of a cause. Aside from sabotage, an infiltration team may 
be assigned targets to photograph or the loading or unloading of dead drops 
(concealed places for hiding film, documents or small containers). Escape may 
be by the same route as entry or by an entirely different method. 

The Economic Warfare Section of the PP staff is a sub-section under 
Paramilitary Operations because its mission includes the sabotage of key 
economic activities in a target country and the denial of critical imports, e.g. 
petroleum. Contamination of an export agricultural product or associated material 
(such as sacks destined for the export of Cuban sugar), or fouling the bearings of 
tractors, trucks or buses destined for a target country may be undertaken if other 
efforts to impede undesired trade fail. As Economic Warfare is undertaken in 
order to aggravate economic conditions in a target country, these operations 
include in addition to sabotage, the use of propaganda, labour, youth, student and 
other mass organizations under CIA control to restrict trade by a friendly country 
of items needed in the target economy. US companies can also be called upon to 
restrict supply of selected products voluntarily, but local station political-action 
assets are usually more effective for this purpose. 

Also coordinated in the Paramilitary section of the PP staff is the effort to 
maintain Agency supplies of weapons used in support of irregular military forces. 
Although the Air and Maritime Support section of the staff supervises standing 
Agency operations to supply insurgents (Air America and Civil Air Transport in 
the Far East, for example) additional resources such as aircraft can be obtained 
from the Defense Department. These operations included the Guatemalan 
invasion in 1954 (aptly given the cryptonym LCSUCCESS); Tibetan resistance 
against the Chinese in 1958-9 and the rebellion against the Sukarno government 
in Indonesia in 1957-8; current training and support of irregular forces in South 
Vietnam and Laos; and increasing sabotage and paramilitary operations against 
the Castro government in Cuba. Leaflet drops as part of the propaganda aspect of 



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paramilitary operations are also arranged through the Air and Maritime Support 
section. 

Closely related to paramilitary operations are the disruptive activities known 
as militant action. Through organization and support of 'goon squads' sometimes 
composed of off-duty policemen, for example, or the militant sections of friendly 
political parties, stations attempt to intimidate communists and other extreme 
leftists by breaking up their meetings and demonstrations. The Technical Services 
staff of the DDP makes a variety of weapons and devices for these purposes. 
Horrible smelling liquids in small glass vials can be hurled into meeting halls. A 
fine clear powder can be sprinkled in a meeting-place becoming invisible after 
settling but having the effect of tear-gas when stirred up by the later movement of 
people. An incendiary powder can be moulded around prepared tablets and when 
ignited the combination produces ample quantities of smoke that attacks the eyes 
and respiratory system much more strongly than ordinary tear-gas. A tasteless 
substance can be introduced to food that causes exaggerated body colour. And a 
few small drops of a clear liquid stimulates the target to relaxed, uninhibited talk. 
Invisible itching powder can be placed on steering wheels or toilet seats, and a 
slight smear of invisible ointment causes a serious burn to skin on contact. 
Chemically processed tobacco can be added to cigarettes and cigars to produce 
respiratory ailments. 

Our training in PP operations includes constant emphasis on the desirability 
of obtaining reportable intelligence information from agents engaged in what are 
essentially action (as opposed to collection) operations. A well-run action 
operation, in fact, can produce intelligence of extremely good quality whether the 
agents are student, labour or political leaders. Justification for continuing PP 
operations in Project Renewals includes references to the operation's value in 
strictly collection activities as well as effectiveness in achieving action goals. No 
action agent, therefore, can be allowed to neglect the intelligence by-product of 
his operation, although the action agent may have to be eased into the 
intelligence reporting function because of the collaborative nature of his early 
relationship with the Agency. Nevertheless with a little skill even leaders of some 
rank can be manipulated into collecting information by letting them know 
indirectly that financial support for them is based partly on satisfaction of 
intelligence reporting requirements. 

The funding of psychological and paramilitary projects is a complex 
business. Project Outlines (see p. 50) are prepared either in the station or at 



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headquarters, depending on which of these is proposing or running the operation. 
Included in this, apart from those elements already mentioned for FI projects, 
will be a statement on the need for coordination with other US government 
agencies such as the State Department or the Department of Defense. Where 
appropriate further reports are attached giving greater detail on finances, 
personnel, training, supply and cover mechanisms. 

Operational progress reports are required each trimester in the case of routine 
operations, but such reports may be more frequent in special cases. Intelligence 
received as a result of p p operations is processed in the same way as that which 
comes from FI operations. 

Funding action operations, especially those involving labour, student, youth 
or other organizations is a perpetual problem. Under certain circumstances it can 
be done through foundations of one sort or another which have been created as 
fronts for the Agency, but before this, or any other, method can be employed 
there first has to be a decision about the level at which the funds should be 
passed. If money is to be put into an international organization like WAY, for 
example, then it might be possible to do this through an American organization 
affiliated to it. The money can then be disguised as a donation from that 
organization. In other circumstances it might be possible to supply the money 
through a 'cutout', that is, through a person who can claim that the money is 
either a donation on his own account or from his business. If this system is used 
the money is sometimes paid by the 'cutout' to a US organization affiliated to the 
international group for whom the money is finally intended. 

If it is paid direct then it is usual for the secretary-general or the finance 
committee chairman of the organization in question to be a 'witting' agent. The 
decision about the method to be used is subject to several considerations. First 
the matter of security and cover is considered; second comes the question of 
which method would best ensure that the recipient or recipients will then do what 
they have been paid for. Thus funds become a very effective method of guiding 
an action agent. When cover foundations or companies are used for funding they 
may be chartered in the US or in countries such as Lichtenstein, the Bahamas and 
Panama, where commercial secrecy is protected and governmental controls are 
minimal. 

Camp Peary, Virginia May 1960 



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The practical exercises are more pleasant now that spring has arrived. Except 
that we pick up hordes of ticks during the paramilitary training. We have had 
training in evasion and escape and border crossing — also night exercises in 
maritime infiltrations and air drops. At the ranges we have firing sessions with a 
variety of pistols, rifles and sub-machine-guns. In July, after the regular JOT 
training course ends, there will be a three-month specialized course in 
paramilitary operations. Ten or fifteen of the class have volunteered for the 
course and afterwards they'll be assigned to operations already underway against 
Vietnam, Laos and Cuba. 

The instructor who was my nationalistic political leader in the FI exercise 
became a wild man in the political-action case. He went around without my 
knowledge trying to recruit colleagues to overthrow the government and telling 
them he was working for me in the US Embassy. The word got back to the 
Ambassador (another instructor) and I had to convince him not to send me home. 
Then I paid the agent a generous termination bonus and picked up with one of his 
party subordinates. 

Still, we have had a serious upheaval in the JOT class. None of us is quite 
sure whether this is a training exercise or real or partly both. The training staff 
has been ranting and raving, both in individual sessions with advisors and in the 
classroom and pit sessions, that we aren't taking the work seriously enough. They 
cancelled a couple of week-ends off and we all had to stay here and practice 
report writing. Morale among the JOT'S is down and resentment against the staff 
gets higher every day. Four of the outstanding trainees have quit — two of them in 
order to take appointments as Foreign Service Officers with the State 
Department. 

The problem grew out of the way most of us handled the practical exercises 
with the political-action agent — practically all of us were crucified in the 
criticism sessions for not having developed proper control over the agent before 
moving into sensitive assignments. The instructors accused us of adopting 
whimsical attitudes — what they call derisively the 'cowboy approach'. Besides 
agent-control failure, the staff is down on us for not taking pains with tradecraft 
in the practical exercises. A couple of weeks ago several teams got arrested while 
photographing a huge chemical plant about twenty miles from here — they were 
caught by security patrols, turned over to the police, and then had to be bailed out 
through the base administration office. It was supposed to be a clandestine 



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photography assignment in a denied area and those guys climbed over the fence 
and started snapping like they were at the beach in August. 

The extra night sessions in tradecraft are supposed to emphasize the dangers 
in taking shortcuts on how clandestine operations are performed — as opposed to 
what is done (FI, CI and PP operations). Tradecraft is all the techniques and tools 
of the trade used to keep a secret operation secret. The tradecraft one selects 
depends on a correct analysis of the operational environment — the set of 
conditions that determine the degree of clandestinity needed, including the 
capabilities of local services, and the strength of the local target organizations 
against which our operations are directed. The more relaxed the operational 
environment, the more simple and uncomplicated the tradecraft and the more 
mileage obtained from each CIA officer. 

Tradecraft is used to keep an operation secure and free from discovery 
because, among many reasons, people's lives are often at stake. The instructors 
keep driving home the importance of care to protect the agent, and they toss out 
example after example of fatal and near-fatal consequences of poor tradecraft. 
The techniques include how to select a meeting-site, counter-surveillance before 
and after clandestine meetings, the use of disguise, safety and danger signals 
before meetings, concealment devices, precautions in the use of telephones, ways 
to counter possible audio penetration of meeting-sites, the use of cutouts or go- 
betweens to avoid frequent direct contact between agents and CIA officers, and 
communication techniques. 

Cover is closely related to operational security because it is the lie 
established to make a secret operation appear to have a legitimate purpose. A 
foundation may serve as a cover funding mechanism. A shipping company may 
serve as cover for maritime operations. An airline may serve as cover for air 
support to paramilitary operations. A legitimate business activity may serve as 
ostensible employment for a CIA officer in a foreign country. The State 
Department, Defense Department and the International Cooperational 
Administration may also serve as cover employment for CIA officers. 

Communications with agents is perhaps the most crucial element of 
tradecraft and operational security. Personal meetings between CIA officers and 
their agents are often the most efficient type of communication but they are also 
the most dangerous and require elaborate security precautions and cover. 
Meetings can take place ilnhotels or apartments obtained for this purpose (safe 
houses), vehicles, subways, parks, isolated woods, tourist attractions. Normal 



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communications may also be through cutouts and dead drops (hiding-places like 
the hollows of trees where messages can be placed). Brush contacts, such as the 
momentary contact for passage of a report, can be used in public lavatories or 
pedestrian tunnels where motion is uninterrupted and hostile surveillance 
difficult. 

Communications with agents in denied areas (Iron Curtain countries) where 
counter-intelligence forces are most effective, is often through encoded radio 
transmissions to the agent, which can be heard on ordinary home radios — while 
the agents' reports are made in invisible writing and sent to a drop address in a 
noncommunist country through the international mails. In such cases personal 
meetings would be restricted to emergencies or when the agent is able to travel to 
a non-communist country. Elaborate signal systems can be established to indicate 
safety, danger, discovery, loading or unloading a dead drop, request for meeting, 
postponement of meeting. 

In every clandestine operation some form of training is usually involved, 
from simple reminders on security precautions to highly specialized instructions 
in the use of complicated technical equipment. In FI operations, continuous 
training is needed for refinement of the agent's reporting in such areas as 
separation of fact from rumour and opinion, specification of sources, correct 
dates, places and names, and spelling and format in written reports. The Office of 
Training has a staff of multilingual training officers in its Covert Training Branch 
who travel the world giving specialized operational training to agents on station 
request. The Technical Services Division personnel are also heavily engaged in 
agent training as is the Office of Communications which is in charge of training 
agents in the use of radio equipment and cryptographic materials. 

Shortcuts in tradecraft on the practical exercises is not the main reason for 
the training staffs toughening up. The real reason is attitudes — they want us to 
get as serious about all this as they are, and they are focusing on agent-control 
factors in order to drive this home. Maybe we'll all have to become heavies in 
order to pass the course. 

The importance of agent control is paramount because agent control means 
the ways an agent is made to do what the CIA wants him to do. Each agent is 
different and not everyone is always willing to do exactly what we want him to 
do — sometimes he has to be coaxed, sometimes cajoled, sometimes threatened. 

'Agent' is a word that is used to signify the people who work at the end of the 
line. Usually they are foreigners and the instruments through which CIA 



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operations are executed. The word 'agent' is never used to describe the CIA career 
employee who functions in a station as an operations officer — more commonly 
known as a case officer. We are all being trained to be case officers, not agents. 

There are different types of agents in CIA parlance. Many operations are 
structured under the leadership of a single agent to whom other agents respond 
either as a group working together or in separate, compartmented activities. The 
single agent who runs an operation under station direction is known as the 
principal agent and the others as secondary or sub-agents. The chief of a five- 
man surveillance team is a principal agent while the foot-men and drivers are 
sub-agents. An action agent is a person who actually provides secret information, 
e.g. a spy in a communist party, whereas a support agent performs tasks related 
to an operation but is not the source of intelligence, e.g. the person who rents an 
apartment for meetings between an action agent and the station case officer. 

Case officers must constantly be searching for new agents to improve 
ongoing operations and to mount new, better operations. Agent spotting, 
therefore, is the activity whereby potential new agents are brought under 
consideration. Agent development is the manner in which a potential agent is 
cultivated and tested while agent assessment is the evaluation of whether and 
how the potential agent can be used effectively. If, after weighing all available 
data, a positive decision is reached for recruitment, the formal clearance 
procedure is completed through the Headquarters Operational Approval system. 
Agent recruitment can take many forms, often determined by the type of 
operation for which the agent is needled and by the history of agent development. 

If your objective is to penetrate a leftist political party, the first thing to do is 
to probe for a weak spot in the organization. You might bug the phone of a 
leading party member and find out he's playing around with the party's funds. In 
that case, perhaps he can be blackmailed. Or perhaps one of your agents plays on 
the same soccer team as a party member, or goes out with his sister. The agent 
might learn something about the party member that seems to make him a good 
prospect. Then you move in and make an offer. 

On certain occasions recruitments are made in the name of the CIA, 
especially when involving US citizens and high-level targets for PP operations. 
But often recruitment can be effected without explicit sponsorship with the target 
simply expected to assume that the CIA is the sponsor. Thousands of policemen 
all over the world, for instance, are shadowing people for the CIA without 
knowing it. They think they're working for their own police departments, when, 



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in fact, their chief may be a CIA agent who's sending them out on CIA jobs and 
turning their information over to his CIA control. On other occasions false flag 
recruitments are more appropriate so that the target believes a service or 
organization other than the CIA is the sponsor, perhaps his own government, or 
even Peking or Havana. You don't let the recruit know he'll be working for the 
United States, because if he knew that, he might not consent to do it. Coercive 
recruitment of a communist party member in an underdeveloped country (under a 
threat made to appear to come from a local security service) may be more 
effective to start with than revealing CIA sponsorship. Later, when financial and 
other means of control have been established, the recruited agent may be brought 
gradually to the knowledge of true sponsorship. 

In nearly all cases involving agents aware of their CIA sponsorship, a direct, 
personal relationship is established between the agent and the case officer. Since 
control of agents is so much more effective by persuasion than by threat, the 
development of personal rapport by the case officer with the agent receives 
constant emphasis from our instructors. On the other hand, agent-handling 
officers are expected always to maintain the upper hand and to avoid dangers that 
can give an agent a handle against him, or any of the different varieties of falling 
in love with your agent'. 

However, as almost all operations depend upon money, delicate treatment of 
financial matters can be used as a constant control factor without insulting the 
agent by treating him as a mercenary. In rich countries a man might become an 
agent for ideological reasons, but in poor countries it's usually because he's short 
of cash. A man with a hungry family to support will do almost anything for 
money. The amounts paid to agents depends on local conditions. In a poor 
country $ 1 00 a month could get you an ordinary agent. In many countries $700 a 
month could get you a cabinet minister. Payment is made in cash — you can't pay 
spies by check. At the end of every month officers deliver pay envelopes to their 
agents around town; they meet in cars or safe houses. Agents should be made to 
count the cash in front of the officer so that any mistakes can be corrected 
immediately. 

Firm guidance of agents, especially those involved in PP operations, where a 
wide variety of alternatives is usually presented, depends largely on the 
personalities of the agent and the case officer, and the twin requirements of 
control and rapport present continuing problems. Capability for detached 



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manipulation of human beings is a cardinal virtue of the CIA case officer and 
nobody makes any bones about it. 

Agent termination and disposal is the way an agent is unloaded when he's no 
longer needed or wanted. It can be touchy and complicated. Much depends on 
whether the termination is friendly or hostile and the reasons for it. Once the 
principle of terminating an operational relationship is established with an agent, 
the procedure usually becomes one of negotiating a financial settlement and quit- 
claim. The financial settlement may depend ostensibly on past services rendered 
by the agent, but under the surface both sides often negotiate on the basis of the 
damage a dissatisfied agent could cause if termination were not to his liking. 
Again the control exercised by case officers over the agent during the entire 
period of employment will reflect on termination negotiations. Efforts by 
terminated agents to get back on the payroll after having spent their termination 
bonus are not uncommon. When asked just how drastic agent termination and 
disposal might become in difficult circumstances, the instructor declined 
comment without disallowing 'final solutions'. 

Camp Peary, Virginia June 1960 

This month the emphasis has been on technical operations and we have had 
to incorporate these skills in the practical exercises, including the training of our 
'agents'. The heat from the training staff over tradecraft and agent control is still 
on, but we're getting used to it now. It looks as if they're trying to build up to a 
peak of tension for the final week of practical exercises — five or six days of 
intense operations in the same war-games scenario either in Baltimore or New 
York. But the past weeks have mostly been dedicated to long hours in 
laboratories learning basic skills in the four main technical functions: audio, 
photography, flaps and seals, and secret writing. 

Audio operations include telephone tapping and all the different techniques 
of bugging. The most common and secure way to tap telephones is through 
connections made in the telephone exchange — sometimes by a unilateral agent 
but usually through a request to the local liaison service. But in certain 
circumstances telephone intercepts 'off the line' (meaning connections made 
somewhere between the target telephone and the exchange) are more advisable. 
There are also small transmitters that can be placed inside a telephone and TSD 



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has developed a pencil-sized transmitter that can be attached to telephone wires 
outdoors for reception in a listening post (LP) not far away. 

Telephones and telephone lines can also be valuable for full audio 
penetration of the rooms where the telephones are located. This technique calls 
for the activation of the telephone mouthpiece so that it will pick up all 
conversations in the room, even when the telephone is cradled, and transmit these 
conversations down the telephone lines. This technique is called the 'hot mike'. 

The simplest and most dependable audio operation is the 'mike and wire' job, 
consisting of a concealed microphone with a wire leading to a listening-post 
where an amplifier and recorder are located. But this technique is also insecure 
because the wire can be followed and unpleasant surprises given to the LP 
keepers. So the mike and wire can be connected to a hidden low-powered radio 
transmitter for reception in an L P protected by being separated from the bugging 
equipment. Transmitters can be connected to house current or operated with 
batteries. 

Switches on transmitters are often desirable especially in audio operations 
against the Soviets, Chinese and satellite governments because of their regular 
counter-audio sweeps in which wide-range receivers are used to detect radio 
transmissions. Visiting sweep teams pose as diplomatic couriers sometimes, and 
transmitters have to be shut down when they are in town. This necessitates 
constant reporting from station to station on the movements of diplomatic 
couriers and suspected sweep officers. 

The carrier-current technique is similar to the regular transmitter installation 
except that the transmission is made through electric power lines instead of 
through the air. This technique is convenient for easy switching and has an 
unlimited power supply, but LP location is complicated because the transmissions 
will not jump electric power transformers. 

Installation of audio devices often requires drilling through walls, floors or 
ceilings, for which TSD has demonstrated a large variety of drills, some with 
diamond bits, but drilling isn't recommended for the inexperienced. Even TSD 
technicians have been known to make the irreparable mistake of drilling large 
holes all the way through the wall or ceiling of a target room. Reducing the size 
of drilling equipment in order to reach the final pinhole takes fine calculation and 
infinite patience. Audio installations often require concealment afterwards, for 
which TSD has their Plaster Patching and Paint Matching Kit. This consists of 



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super-quick-drying plaster, some fifty colour chips with mixing formulas for 
colour approximation, plus odourless super-quick-drying paint. 

Listening-post equipment for telephone taps usually consists of a Revere 
(ape-recorder and an actuator/dial recorder that starts the recorder when a 
telephone rings or when it is uncradled. Numbers called from the target telephone 
are also recorded on a paper tape. LP equipment for other audio operations may 
include FM radio receivers such as the military-supplied SRR-4 with a 50-200 
megacycle range, headphones and a variety of tape-recorders. When switches are 
used the LP has a suitcase-package radio transmitter that transmits one frequency 
to turn a switch on, and another frequency to turn a switch off. But switches 
haven't been perfected yet and they cause problems by jamming in the on or the 
off positions. 

The research and development programmes of the TSD Audio Branch are 
dedicated to improving equipment like the switch systems and to development of 
sub-miniature microphones and transmitters for casting into innocuous objects 
like light-switches and electrical outlets — also to the development of new 
techniques. One new technique is the activation of cradled telephones (the 'hot 
mike') by sending a current down the line to the telephone without the need to 
make a complicated installation in the telephone itself. Another fascinating 
technique under development is the use of infra-red beams that can be bounced 
off windows and that carry back to the receiving equipment the conversations 
being held in the room where the target window is located. This technique 
captures the conversations from the vibrations of voices against the window- 
panes. 

Still another new technique involves the use of cavity microphones like the 
one discovered in the eagle's beak of the Great Seal given by the Soviets to the 
American Ambassador in Moscow and which he placed in his office. The cavity 
microphone is a simple plastic spoon-shaped object that can be activated by a 
radiowave of a certain frequency. The spoon reacts by transmitting another radio 
signal that carries the voice vibrations from the room to an appropriate receiver. 
That Soviet-made Great Seal was included in a display of audio equipment with 
the admission that the Soviets are far ahead in this particular field. 

In photography we have learned to use a variety of cameras for general 
purpose and documents. 35-mm cameras like the Exacta, Leica and Pentax are 
the favourites of the instructors, although the tiny Minox is more secure for 
agents. We've been practising also with clandestine photography using cameras 



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that can be concealed in a briefcase or innocuous package — even underneath a 
shirt with the lens opening disguised as a tie clasp. Darkroom training-sessions 
have concentrated on selection of films, paper and developing chemicals. In the 
practical exercises each of us incorporated both document and outdoor 
photography with developing and printing in the dark-rooms. 

The really boring technical skill is Flaps and Seals (F & S). This is the 
surreptitious opening and closing of letters and other containers such as 
diplomatic pouches. For a week we practised with hot plate, tea kettle and the 
variously shaped ivory tools fashioned- from piano keys and used for gently 
prying open envelope flaps. But the most effective technique for letters is the 
flat-bed steam table (about the size of a briefcase) that contains a heating element 
encased in foam rubber. Steam is created by placing a damp blotter on the top of 
the heated table, and most letters open in a matter of seconds after being placed 
on the blotter. Careful resealing with cotton swab and clear glue completes the 
process. 

Secret writing (SW) is the communications system used for concealing or 
making invisible a secret message on an otherwise innocent letter or other cover 
document. SW systems are categorized as wet systems, carbons and microdot. 
The wet systems use chemicals, usually disguised as pills, which dissolve in 
water to form a clear 'ink'. The secret message is written on a sheet of paper, 
preferably high-quality bond, using the end of a wooden swab stick that has been 
tapered with a razor-blade and soaked in the 'ink' to reach the proper tip 
flexibility. Before and after writing the message the paper must be rubbed with a 
soft cloth on both sides in all four directions to help conceal the writing within 
the texture of the paper. The paper with the secret message is then steamed and 
pressed in a thick book and after drying, if no trace of the message can be seen 
under ultra-violet and glancing light, a cover letter or innocuous message is 
written. 

Carbon systems consist of ordinary bond paper that has been impregnated 
with chemicals. The carbon is placed on top of the message sheet and the secret 
message is written on a sheet placed on top of the carbon. Applying the proper 
pressure when writing the secret message with a pencil on the top sheet transfers 
the invisible chemical from the carbon to the message sheet on the bottom. The 
cover letter is then written on the opposite side of the message sheet from the 
secret message. 



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On receipt of an SW letter, an agent applies a corresponding chemical 
developer, rolling the developer with a cotton swab on to the page, and soon the 
secret message appears. 

The microdot system involves a small camera kit with which a letter-sized 
page can be photographed on an area of film no larger than the dot of an 'i'. The 
microdot is glued over the dot of the T or a period of a cover letter. Although the 
equipment for microdots is incriminating, the microdots themselves are very 
secure and practically impossible to discover. On the other hand they require very 
tedious processing and can only be read with a microscope. 

Secret messages can be written either in clear text or encoded for greater 
security. The SW branch of TSD has a continuous intelligence collection 
programme on the postal censorship procedures in most foreign countries for 
protective procedures in SW operations. The operational environment in which 
the agent works determines the other details of SW correspondence: whether the 
SW cover letter will be posted nationally or internationally, to a post-box or a 
support agent serving as an accommodation address, with false or true return 
addresses or none at all, the content of the cover letters, signals to indicate safety 
or the absence of which could indicate that the writing is being done under 
control of a hostile service. 

The SW branch also has a technique for' lifting's w from suspect 
correspondence. The process involves placing a suspect letter in a letter press 
with steamed sheets on either side. By cranking down pressure enough of the 
chemicals will come off on the steamed sheets to allow for testing with other 
chemicals for development. The suspect correspondence can be returned to the 
mails with no traces of tampering. 

The TSD instructors have also demonstrated some of their techniques in safe- 
cracking, surreptitious entry and lock-picking. But these are such highly 
specialized activities that TSD technicians almost always travel to countries 
when these talents are needed. As ordinary case officers we will need only the 
basic skills and enough knowledge of the really special techniques to know how 
to plan and when to ask for TSD technicians. 

A few weeks ago I was discharged from the Air Force. Now I'm a civilian 
employee of the Department of the Air Force, as I was when I came to 
Washington three years ago. The cover unit is another bogus Pentagon office 
with the major, the colonel and all that routine. But I'm keeping my commission 



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(I'm a First Lieutenant now) by joining an Agency Air Force reserve unit. This is 
a cover unit too. 

Last week Ferguson came down from headquarters and he opened his session 
with me with a speech on the increasing demand in the Western Hemisphere 
Division for new case officers — apparently Castro and the Cuban Revolution are 
causing more and more problems all over Latin America. My reaction is 
disappointment, what with all my old fantasies of being a cloak-and-dagger 
operative in Vienna or Hong Kong. But Ferguson said I could ask for a transfer if 
after six months I still don't like it. It looks like ten or fifteen of us are destined 
for the Western Hemisphere Division so maybe it won't be so bad. Besides, all 
those hours in the language lab may at last be useful. 



Notes: 

1. See Chart l,p. 630. 

2. Later known as the 54-12 Group, the Special Group, the 303 Group, the 
Forty Committee. 

3. Later renamed the United States Intelligence Board. 

4. Renamed in 1961 the President's Foreign Intelligence Advisory Board. 

5. See Chart 2. 

6. See Chart 3. 

7. See Chart 4. 

8. See pp. 319-20. 

9. See Chart 5. 

10. Predecessor of the Agency for International Development (AID). 

11. Later known as the International Student Conference (ISC). 

12. Later renamed the World Confederation of Labor. 



79 



Part Two 



Washington DC July 1960 



The training programme has ended at last. We spent the last week of June in 
Baltimore running .in and out of department stores chasing our instructors on 
surveillance exercises. It was just like earlier exercises in the cities in Virginia 
except it went on day and night and included bugging hotel rooms, loading and 
unloading 'dead drops', writing invisible messages, and several difficult agent 
meetings. Most of us spent the few free hours at night at the Oasis on East 
Baltimore Street — without par in really raunchy, fleshy, sweaty stripping. 

My feelings were mixed about leaving Camp Peary. It was an isolated sort of 
life but the club was fun — the bar, ping-pong, chess. What I'll miss most is the 
athletic programme and that nice gym. 

After a short vacation I checked back with Ferguson J and he sent me over to 
the personnel officer in the Western Hemisphere (WH) Division. He didn't seem 
to have expected me and after waiting a couple of hours he sent me to the 
Venezuela desk, which, I discovered, consists of the desk officer, a secretary, and 
now me. We are part of Branch 3 of WH Division which covers the Bolivarian 
countries: Venezuela, Colombia, Ecuador, Peru and Bolivia - and we also handle 
matters related to the Dutch islands, Aruba and Curacao, British Guiana and 
Surinam. Branch 1 has Mexico and Central America, Branch 2 has the 
Caribbean, Branch 4 has Brazil and Branch 5 has the cono sur. Uruguay, 
Paraguay, Argentina and Chile. Cuban affairs are centred in a special branch and 
the paramilitary operation (it looks like a repeat of the Guatemala operation but I 
can't get many details) has taken over a wing of Quarters Eye. All the rest of the 
division is in Barton Hall near Ohio Drive and the Potomac. 

WH Division Is the only area division of the DDP that isn't over in the 
buildings along the Reflecting Pool, and more and more I've been getting the 
impression that this division is looked down upon by the rest of the DDP. It 
seems that the physical separation of the division from the rest of the DDP has 
created the concept of WH as a fiefdom of Colonel J. C. King % — he's been WH 
Division Chief now for some years. The other reason for disdain towards WH (I 
hear these stories from JOT's who have been assigned to other divisions) is that 
most of the division leadership — the branch chiefs and the station chiefs in the 
field — are a fraternity of ex-FBI officers who came into the CIA in 1947 when 
the CIA took over FBI intelligence work in Latin America. 



INSIDE THE COMPANY: CIA DIARY 



It's embarrassing because they call us the 'gumshoe division', even though the 
best communist party penetration operations are in Latin America — WH in fact 
was responsible for getting the secret Krushchev speech to the 20th CPSU 
Congress, which the Agency made public long before the Soviets wanted it to be. 
And everybody knows about Guatemala. The problem is that the glory for super- 
spooky achievements is enjoyed mostly by EE officers — old hands from Berlin 
and Vienna. We'll see how they treat us after Castro gets thrown out! 

I can't say I'm wild about the work I've been given. I inherited a desk full of 
dispatches and cables that nobody had done anything about and trying to make 
sense out of all this is frustrating — I have to keep bothering people to find out 
what all the office symbols mean on the routing sheets, who takes action on what, 
and which is more and which is less important. Most of my work is processing 
name checks and reports. 

The name checks are even duller than processing reports. The first one I did 
was on some Jose Diaz and I didn't realize it was such a common name. When I 
got the references back from Records Integration Division (RID) there were over 
a thousand traces on people of that name. Trace requests for RID have to be 
narrowed down by date and place of birth and other identifying data. The bulk of 
the name checks are for the Standard Oil subsidiary in Venezuela — the company 
security officer is a former FBI man and he checks the names of prospective 
Venezuelan employees with the CIA before hiring — trying to keep out the bad 
guys. 

This work routine has to improve — I can't spend a couple of years on reports 
and name checks. 

Washington DC August 1960 

I must be living right — and I'm almost too afraid to think about it — but I may 
just get a field assignment sooner than I could ever imagine. Yesterday morning 
my desk chief, C. Harlow Duffin, J asked me if I was interested in working 
overseas as he knows of an operations officer slot opening up next month in 
Quito, Ecuador, and if I'm interested he'll see what he can do. But he said nobody 
talks about field personnel assignments before they're approved so I've got to 
keep it secret until he says I can talk. Next month! But he said I wouldn't go right 
away. First, I'll have really to learn Spanish, then process into the Department of 
State — lots of details to take care of first. 



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Yesterday morning I picked up a book and some briefing material from the 
Ecuador desk, and I've been reading this instead of doing my work. I can't seem 
to lay it aside. Talk about banana republics and underdevelopment! Ecuador must 
be classic: torn apart as it is by internal contradictions and ruled by privileged 
oligarchies while bigger neighbours gobbled up enormous territories that 
Ecuador couldn't defend. 

The overwhelming international reality for Ecuador is Peru and the 1942 
Protocol of Rio de Janeiro whereby Peru made good its claim to over one third of 
what until then Ecuadoreans had considered national territory. In July and August 
1941, after several months of negotiations had failed, Peruvian troops 
overwhelmed Ecuadorean defences in the south — and in the eastern Amazonian 
region. The Rio Protocol was signed after new negotiations and Peru got the 
disputed territory, mostly Amazonian jungle. There is a Peruvian side to the story, 
of course, but Ecuador will never forgive having to sign the Rio Protocol under 
duress. The US was already at war and we needed peace in South America for 
our own war effort. Although the Peruvian victory in 1 94 1 was only the latest in 
a series of disputes that go all the way back to pre-hispanic history, for Ecuador, 
easily defeated and claiming dismemberment by force, the Rio Protocol is a 
source of national humiliation less than one generation removed. The US 
government is deeply involved because we promoted negotiation of the Rio 
Protocol and are still responsible for enforcing it — along with the other guarantor 
powers: Brazil, Chile and Argentina. 

While Peru is the great international reality for Ecuador, the dominant 
national reality is the division of the country between sierra and coast. Although 
the Andes split the country down the middle, the eastern region is mostly tropical 
jungle divided by Amazonian tributaries. Some years ago exploration was made 
for petroleum but the cost of a pipeline over the Andes wasn't justified by the 
discoveries. The oriente, then, with its sparse population (including head- 
shrinking Indians) counts very little in the national life. The other two regions, 
the Andes highlands and the Pacific coast, are almost equally divided in area and 
population, and their interests are traditionally in conflict. 

Liberal revolution came to Ecuador in 1895 and the main victim was the 
Church, as the dominant coastal forces behind the revolution took control of 
national policy out of the hands of the traditional sierra landowners. Church and 
State were separated, lay education was established, civil marriage and divorce 
were instituted, and large Church properties were confiscated. 



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Following the revolution in 1895 the Liberal Party dominated Ecuadorean 
politics as liberals joined conservatives in the landowning aristocracy while 
conditions changed very little for the overwhelming mass of the population 
completely outside the power structure. Even so, Ecuadorean politics in the 
twentieth century is not just another history of violent conservative-liberal 
struggle for spoils of office — it is indeed that, but much more. Ecuador has one 
of the most amazing Latin American politicians of the century: Jose Maria 
Velasco Ibarra — elected President once again just two months ago. This is the 
fourth time he's been elected President and none of his terms have been 
consecutive. And of his three previous times in power, two ended before the 
constitutional term was over because of military coups against him. 

Velasco is the stormy petrel of Ecuadorean politics, a spellbinding orator 
whose powers of rhetoric are irresistible to the masses. He is also an authoritarian 
who finds sharing power with the Congress very difficult. His politics are as 
unpredictable as his fiery temperament and he has taken conflicting positions on 
many political issues, thereby attracting support from all established political 
parties, at one time or another. He won the June elections by the largest margin 
ever attained by an Ecuadorean presidential candidate and he did it in his 
typically clever fashion. Running as an independent he allied himself with the 
impoverished masses in violent tirades against the ruling oligarchies who, he 
claimed, were behind the candidates of the Liberal and Conservative parties. He 
called for fundamental economic and social change, an end to rule by oligarchies 
and political bosses, and a fairer distribution of the national income. On this 
populist appeal Velasco got almost 400,000 votes, a smashing victory, and his 
denunciations of the Rio Protocol during the campaign made him the champion 
of Ecuadorean nationalism. 

Velasco is due to take office in September but the station in Quito isn't taking 
any bets on how long he'll last. After three consecutive Ecuadorean presidents 
have served out their terms, perhaps the instability of the past is ending. Velasco's 
term is for four years, but taking into account the fact that he is Ecuador's 70th 
President in 130 years of independence one can't be too sure. I hope I'll be there 
to see. 



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Washington DC August 1960 

I know I'm over-eager and impatient but I thought I'd go mad during the 
week they were deciding. Duffm finally called me in and said the Branch Chief, 
Edwin Terrell, J had approved my nomination and that the reaction in Colonel 
King's office was also favourable. The officer who is in the position now is being 
transferred to Guayaquil as Base Chief in September and the station is calling for 
a replacement right away. The WH personnel officer is arranging for me to go 
into full-time Spanish training with a tutor so that I can get to Quito as soon as 
possible. Cover for the job is Assistant Attache in the US Embassy political 
section, which means I'll have diplomatic status and 'integration' with the State 
Department as a Foreign Service Officer. 

Then Duffm let me in on a secret. He said he is scheduled to go to Quito as 
Chief of Station (COS) next summer which is why he picked me. Meanwhile, he 
said, I'll be working with one of the best-liked COS's in WH Division: Jim 
Noland. J Even with the Spanish training and the time needed for State 
Department integration, Duffm says I'll still be in Quito before Christmas. 

Duffm then set up a meeting for me with Rudy Gomez, J the Deputy 
Division Chief who gives the final approval on all lesser personnel assignments. 
He's a gruff sort. Without looking up he said that if I didn't have a good reason 
for not going to Quito, then I'd have to go. I said I wanted to go, played it real 
straight and got his approval. Apparently I'm one of the first of our JOT class to 
get a field assignment — the only one I've heard of so far who will get out before 
me is Christopher Thoren J who's being assigned this month under State 
Department, cover in the US mission at the United Nations. 

Washington DC August 1960 

Getting to know Ecuador is at once stimulating and sobering. The new 
Congress, elected in June with Velasco, opened on 10 August although Velasco 
doesn't take office until 1 September. If the tactics of Velasquistas in the 
Congress are any indication, the new government may dedicate itself more to 
persecuting the Poncistas of the outgoing regime than to governing the country. 
The Velasquistas have a wide plurality in Congress but are just short of a 
majority. At the opening, which consisted of the annual messages of President 
Ponce and the President of the Supreme Court, Ponce was overwhelmed by the 



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insults and jeers from the screaming Velaquista-packed galleries, unable to be 
heard during the entire three-and-a-half-hour speech. The President of the 
Supreme Court, however, followed Ponce and was heard with silence and 
respect. Congressional sessions since then have been dedicated to efforts by the 
Velasquistas to discredit the Ponce government, and Ponce's two most important 
ministers, Government (internal security) and Foreign Relations, have resigned 
rather than face humiliation in interpellations (political interrogations) by the 
Congress. 

Attacks by Velasquistas against Ponce and his supporters reflect traditional 
rivalries but are especially acute now because the Velasquistas are beginning to 
take revenge for government repression against them during the electoral 
campaign and even earlier. The most notorious incident was at a Velasquista 
demonstration on 19 March when five Velasquistas were killed and many 
wounded. The demonstration was to celebrate Velasco's arrival in Quito to begin 
the political campaign after several years of self-imposed exile in Argentina. The 
Velasquista campaign that followed was as much a campaign against Ponce and 
traditional Ecuadorean oligarchies as it was in favour of political policies 
proposed by Velasco. While reform proposals for a fairer distribution of the 
national income and more efficient government administration were central to the 
Velasco campaign, many are sceptical of his personal stability as well as his 
ability to break the power of the one hundred or so families that have controlled 
the country for generations. 

The people, nevertheless, liked what they heard from Velasco because this 
country's extreme injustices and poverty are so acute. Not only is Ecuador the 
next-to-the -poorest country of South America in terms of per capita annual 
income (220 dollars — about one third of Argentina's and less than one tenth of 
ours) but even this low average amount is extremely unevenly divided. The top 1 
per cent of the population receives an income comparable to US standards while 
about two thirds of the population get only on average a monthly family income 
of about 10 dollars. This lower two thirds, consisting largely of Indians and 
people of mixed blood, are simply outside the money economy, completely 
marginalized and without social or economic integration or participation in the 
national life. 

Except among those who would be adversely affected, there is wide 
agreement that the root of Ecuador's extremes of poverty and wealth is in land 
tenure. As in other countries the best lands belong to large landowners who 



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employ relatively few rural workers and thereby contribute to the growing urban 
unemployed. The small plots usually cannot produce more than a subsistence 
income due to land quality and size. Even .on the coast where the cash crops of 
bananas, coffee, cacao and rice are raised on small- and medium-sized properties, 
fluctuating prices, marketing difficulties, scarce credit and low technification 
combine for low productivity and a precarious existence for salaried workers. 

Thus land reform and a stable market for export crops are fundamental for 
the economic development necessary before Ecuador can begin to invest 
adequately in facilities for education, health-care, housing and other possible 
benefits. Indicators are typical of poor countries: poor diet; high incidence of 
debilitating diseases caused by intestinal parasites from bad drinking water; 
370,000 children unable to attend school this year because no schools exist for 
them; a housing deficit of 580,000 units in a country of 4.3 million. 

Solutions to this misery are being sought both externally and internally. In 
the external sector the Ecuadoreans are making efforts to stabilize the falling 
prices that in recent years have forced them to produce ever greater quantities in 
order to sustain imports. Also of great importance is foreign aid obtained in part 
from the International Cooperation Administration (ICA) which has a technical 
assistance mission in Ecuador. Internally, the Ecuadorean government must 
embark on a programme of reforms: agrarian reform to raise productivity and 
increase rural employment; fiscal reform to increase government revenues and 
redistribute income; administrative reform to improve the government 
administration and the myriad agencies that currently enjoy autonomy — and to 
reduce corruption. Already a movement is underway to abolish the huasipungo, a 
precarious form of tenure, although government land policy is mainly orientated 
towards colonization and opening of new lands with limited success. Lowering 
the population growth, now up to 3.1 per cent annually, is of obvious importance, 
but is hindered by tradition and Catholic Church policy. Somehow all of these 
programmes will contribute to raising the rate of economic growth and to 
increasing the benefits available to the marginalized two thirds of the population. 
Promises for these reforms and increased benefits won Velasco his sensational 
victory, and he'll soon have the chance to deliver. 



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Washington DC September 1960 

For several weeks I've been studying Spanish full-time with a tutor in 
Arlington, and on the tapes in the language lab. I'll probably be in this routine 
until November when I get integrated to the State Department and take the two- 
week orientation course at the Foreign Service Institute. Meanwhile I stop in 
each morning to see Duffin and read more background material at the 
Ecuadorean desk. 

Velasco is now President. He has embarked on two early policies that affect 
operations of the Quito station and other matters of concern to us. First, he is 
trying to purge all the supporters of Ponce from government employment, and 
secondly, he is stirring up the border problem with Peru by declaring the Rio 
Protocol null and void. 

Immediately after taking power Velasco relieved forty-eight military officers 
from their assigned duties and placed them at the disposition of the Ministry of 
Defence. Velasco also started a purge in the National Police, starting with the two 
senior colonels Who were the station's main liaison agents. They were arrested 
and charged with participating in the 1 9 March riot. 

More serious was the forced departure of our Station Operations Officer 
under Public Safety Cover with the United States Operations Mission (USOM) of 
the ICA programme. Our Station Officer, Bob Weatherwax, J had been in the 
forefront directing the police during the 19 March riot, and he was clearly 
identified because of his very blond hair and red face - practically an albino 
colouring. As soon as Velasco was inaugurated Weatherwax and Jim Noland, the 
COS, were notified by Jorge Acosta Velasco, J the President's nephew and family 
favourite (he has no children), that Weatherwax should leave the country for a 
while to avoid being dragged into the prosecutions for the 19 March affair. 
Acosta, who is a close friend of both Weatherwax and Noland, made the 
suggestion only to be helpful, not as an official act. Nevertheless, Noland agreed 
and Weatherwax is now back in Washington killing time until he can return. 

The government purge is being run mostly by Manuel Araujo Hidalgo who 
was elected to the Chamber of Deputies from Pichincha Province (the Quito 
region) and who is now Minister of Government. He was appointed after Velasco 
fired his first Minister of Government only a week after taking office. Araujo had 
to resign the Deputies seat but he is clearly the leader of the Velasquista mobs. 



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Araujo is an extreme leftist and ardent defender of the Cuban Revolution — 
exactly the wrong man for the most important internal security job. He is 
particularly hostile to the US, and the station is fearful that he may jeopardize the 
Public Safety Programme because he is also in charge of the National Police. The 
real danger is that all our efforts to improve the government's security capabilities 
in preparation for the 11th Inter- American Conference — now just six months 
away — may go down the drain. 

Araujo's purge is running not only into the military services and the police. 
The civilian government employees are also being purged of Ponce supporters — 
helped especially by the Congress's repeal of the Civil Service Career Law 
passed during the Ponce administration. Velasco obviously wants to pack the 
government with his own people. 

Velasco's declaration in his inaugural speech that the Rio Protocol is void has 
been followed by rising tension and fears that the dispute may jeopardize the 
Inter-American Conference. Ecuadoreans are without doubt behind Velasco on 
the matter, but Velasco is using the issue to denounce any opposition to his 
policies as anti-patriotic and prejudicial to a favourable solution of the boundary 
problem. So far the Conservative Party and the Social Christians, while 
defending the Ponce administration, have not declared open opposition to 
Velasco. 

Washington DC October 1960 

Headquarters files on the operations of the Quito station and its subordinate 
base in Guayaquil reflect the very careful analysis of the operational environment 
that is always the framework within which operations are undertaken. Although 
the analysis includes assessments of such factors as security and cover, the most 
important part deals with the enemy. 

The Communist Party of Ecuador (PCE) 

Although the PCE has been a legal party since World War II, it has never 
been able to obtain the 5000 signatures necessary for inscribing candidates in 
national elections. However, Pedro Saad, the PCE Secretary-General, held the 
seat as Functional Senator for Labour from the coast from 1947 until last June 
when he was defeated through a Guayaquil base political-action operation. (The 



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Ecuadorean Senate has a number of 'functional senators' from coast and sierra 
representing special interest groups, e.g. labour, commerce, education, 
agriculture, the military services.) Membership in the PCE is estimated by the 
station at around 1000 with perhaps another 1000 members in the Communist 
Youth of Ecuador (JCE). Almost all of the members of the PCE National 
Executive Committee reside in Guayaquil. With respect to the emerging Sino- 
Soviet differences the PCE national leadership supports the Soviets although 
some PCE leaders in the sierra, particularly in Quito, are beginning to lean 
towards the more militant Chinese position. 

In the elections this year the PCE joined with the left wing of the Socialist 
Party and the Concentration of Popular Forces (CFP) to back a leftist candidate 
for President, the Rector of Guayaquil University, who received only about 
46,000 votes — just 6 per cent of the total. PCE strength, however, is not 
measured in voter appeal but in the strength of labour, student and youth 
organizations in which its influence is strong. 

The Socialist Party of Ecuador (PSE) 

Although much larger than the PCE, the Socialist Party has cooperated for 
many years with the Communists in the leadership of the labour movement. 
Recently the Socialists have split into a right wing which formed an alliance with 
the Liberal Party in the unsuccessful presidential campaign of Galo Plaza this 
year, and a left wing which voted with the PCE and the CFP. 

Because of its support for the Cuban Revolution and of violent revolutionary 
principles, the left-wing Socialists are dangerous and inimical to US interests. 
Their successes, however, are concentrated in the labour movement and 
intellectual circles. The President of the Ecuadorean Workers' Confederation is a 
leftwing Socialist as is the Functional Senator for Labour from the sierra. 

The Ecuadorean Workers Confederation (CTE) 

Founded by the Communists and the Socialists in 1944, the CTE is by far the 
most dominant labour confederation in Ecuador and a member of the World 
Federation of Trade Unions (WFTU). Although the Secretary-General of the 
PCE, Pedro Saad, headed the CTE at the beginning, a Socialist took over in the 
late 1940s and this party is still in nominal control. However, the Communists 



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retained the number two position and are now considered to exercise dominant if 
not complete control in the CTE. CTE membership is estimated at 60,000 — less 
than 1 0 per cent of the poorly organized labour force, but enough to cause serious 
trouble. 

The Ecuadorean Federation of University Students (FEUE) 

Consistent with the traditional leftist-activist student movement in Latin 
America, the FEUE — the principal Ecuadorean national student union — has been 
under frequent, if not continuous, control by PCE, JCE and left-wing Socialists. 
Its loud campaigns are directed against the US presence in Ecuador and Latin 
America, mainly US business, and strongly in support of the Cuban Revolution. 
When appropriate issues are presented the FEUE is capable of mobilizing the 
students, secondary students included, for strikes and street manifestations as 
well as propaganda campaigns. It is supported by leftist professors and 
administrators in the five state universities in Quito, Guayaquil, Portoviejo, 
Cuenca and Loja. 

The Revolutionary Union of Ecuadorean Youth (URJE) 

In 1959 the youth organizations of the Communists, the Socialists and the 
Concentration of Popular Forces formed URJE which has become the most 
important leftist-activist youth movement. It engages in street demonstrations, 
wall-painting, circulation of flysheets, intimidation — agitation of many kinds for 
revolutionary causes. Although URJE denies that it is a communist front, the 
station considers it under PCE control and the most immediate and dangerous 
threat for terrorism and armed insurgency. It is stronger in Guayaquil than in 
Quito, and its membership in both places totals about 1000. URJE gives 
unqualified support to the Cuban Revolution and several URJE leaders have 
travelled to Cuba, probably for revolutionary training. 

Hostile Elements in the Ecuadorean Government 

The Velasquista movement, as a heterogeneous populist movement contains 
political colourings from extreme right to extreme left. The Minister of 



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Government, Manuel Araujo Hidalgo, is our most important enemy in the 
government, but others, such as the Minister of Education and various appointees 
to lesser posts, are also dangerous. The station has a continuing programme for 
monitoring leftist penetration in the government, and the results are regularly 
reported to headquarters and to the Ambassador and the State Department. Aside 
from the National Government, the mayors of the provincial capitals of Ambato 
and Esmeraldas are Revolutionary Socialists. 

The Cuban Mission 

The Cuban Embassy consists of the Ambassador and four officials. The 
station lacks concrete information on support by the Cuban Embassy to 
Ecuadorean revolutionary organizations, but their overt contacts with extreme 
leftists leave little doubt. Araujo is their angel in the government and of course 
they are supported by leftists throughout the country. While the station is making 
efforts to penetrate the Embassy — and the Guayaquil base is doing the same 
against the one-man Cuban Consulate — the main CIA drive is to promote a break 
in diplomatic relations through propaganda and political-action operations. 

The Czech Mission 

Ecuador broke diplomatic relations with Czechoslovakia in 1957 but during 
his last week in the presidency, Ponce received the Czech Minister to Brazil and 
relations were again established. The station expects that within a few weeks or a 
little longer the Czechs will try to establish a diplomatic mission in Quito which 
undoubtedly will include intelligence officers. 

Operations of the Quito station and the Guayaquil base are directed against 
these targets and are laid down in the Related Missions Directive (RMD) for 
Ecuador, which is a general statement of priorities and objectives. 

PRIORITYA 

Collect and report intelligence on the strength and intentions of communist 
and other political organizations hostile to the US, including their international 



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sources of support and guidance and their influence in the Ecuadorean 
government. 

Objective 1: Effect agent and/or technical penetrations at the highest possible 
level of the Communist Party of Ecuador (PCE), the Socialist Party of Ecuador 
(PSE-revolutionary), the Communist Youth of Ecuador (JCE), the Revolutionary 
Union of Ecuadorean Youth (URJE) and related organizations. 

Objective 2: Effect agent and/or technical penetration of the Cuban missions 
in Ecuador. 

PRIORITY B 

Collect and report intelligence on the stability of the Ecuadorean government 
and on the strength and intentions of dissident political groups. 

Objective 1: Maintain agents and other sources at the highest levels of the 
government, the security services and the ruling political organization. 

Objective 2: Maintain agents and other sources in opposition political parties, 
especially among military leaders favourable to opposition parties. 

PRIORITY C 

Through propaganda and psychological warfare operations: (1) disseminate 
information and opinion designed to counteract anti-US or pro-communist 
propaganda; (2) neutralize communist or extreme-leftist influence in principal 
mass organizations or assist in establishing or maintaining alternative 
organizations under non-communist leadership. 

Objective 1: Place appropriate propaganda in the most effective local media. 

Objective 2: Support democratic leaders of political, labour, student and 
youth organizations, particularly in areas where communist influence is strongest 
(Ecuadorean Federation of University Students (FEUE); Ecuadorean Workers 



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Confederation (CTE)), and where democratic leaders may be encouraged to 
combat communist subversion. 

That is a sizeable order for such a small station and base — although the CIA 
budget for Ecuador is a little over 500,000 dollars for this fiscal year. The Quito 
station consists of the Chief, James B. Noland; } Deputy Chief (this job is vacant 
and will not be filled until early next year); one operations officer which is the 
job I'm being sent to; a reports officer, John Bacon, J who also handles several of 
the most important operations; a communications officer; an administrative 
assistant (she handles the money and property and doubles as Noland's 
secretary); and a secretary-typist. The entire station is under cover in the political 
section of the Embassy with the exception of Bob Weatherwax, J the operations 
officer under Public Safety cover in USOM. 

The Guayaquil base forms the entire small political section of the Consulate, 
consisting of a base chief, Richard Wheeler, J (my predecessor in Quito); one 
operations officer; an administrative assistant who also handles communications; 
and a secretary-typist. 

The general directives of the RMD are put into practice through a number of 
operations, making use of agents we have recruited, and which are summarized 
now in some detail, first so far as the main station at Quito is concerned, then for 
the Guayaquil base. 

Quito Foreign Intelligence and Counter-intelligence Operations (FI-CI) 

ECSIGIL. This is our most important penetration operation against the 
Communist Party of Ecuador and consists of two agents who are members of the 
PCE and close associates of Rafael Echeverria Flores, principal PCE leader in the 
sierra. The agents are Mario Cardenas, % whose cryptonym is ECSIGIL- 1, and 
Luis Vargas, % who is ECSIGIL-2. They have been reporting for about four years 
since their recruitment as 'walk-ins' after their disillusionment with the PCE. 
Although the agents are close friends and originally came to the station together, 
they have since been discouraged from associating too closely, so that if one is 
ever blown, the other will not be contaminated. The separation is also designed to 
prevent their collaborating over what they report. 

Cardenas is directed through a cutout, Mario Cabeza de Vaca % a Quito milk 
producer who became a US citizen through military service in World War II but 
returned to Ecuador afterwards. He is married to an American who runs the food 



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and liquor commissary of the US Embassy. Vargas is directed through another 
cutout, Miguel Burbano de Lara, } who is the Quito airport manager of Pan 
American-Grace Airways. The cutouts are not supposed to know each other's 
identity, although each knows that Vargas and Cardenas are reporting, and they 
meet separately with the station Reports Officer, John Bacon, who handles this 
operation. 

Although neither of these agents holds important PCE elective positions, they 
are extremely close to Echeverria and the decision-making process in Quito. 
They receive information on practically all matters of importance, and the 
ECSIGIL project accounts for an average of about five or six disseminated 
intelligence reports in Washington each week. 

ECFONE. This operation consists of an agent penetration of the PCE and his 
cutout who also reports on the policy and plans of the Velasco government. The 
recruitment of the PCE agent, Atahualpa Basantes Larrea, J ECFONE-3, is one 
of the more interesting recent station accomplishments. Early in 1960 when the 
leaders of Velasco's political movement began to organize for Velasco's return 
from Buenos Aires and the presidential campaign, Oswaldo Chiriboga, } 
ECFONE, was a Velasquista leader reporting to the station on Velasco's political 
campaign. Chiriboga advised one day that he had recently seen his old friend, 
Basantes, who had been active in Ecuadorean communism but had drifted away 
and was now in dire financial straits. Noland, the COS, directed Chiriboga to 
suggest to Basantes that he become more active in the PCE and at the same time 
become an adviser to Chiriboga on PCE reaction to the Velasco campaign. Care 
was taken from the beginning to establish a secure, discreet relationship between 
Chiriboga and Basantes, and Noland provided Chiriboga with modest sums for 
Basantes's 'expenses' as adviser — the classic technique for establishing a 
developmental agent's dependence on a station salary. Basantes had no trouble 
expanding his activities in the PCE and soon he was reporting valuable 
information. Chiriboga, of course, moved carefully from innocuous matters to 
more sensitive information while easing Basantes into an agent's dependency. 
Although the original rational for Basantes's reporting ended with the elections in 
J~ne, Chiriboga has since been able to convince Basantes of the continuing need 
for his' advice'. 



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ECOLIVE. An agent penetration of the Revolutionary Union of Ecuadorean 
Youth (URJE), ECOLIVE-1, { is a recent walk-in who is considered to have long- 
range potential for penetrating the PCE or other revolutionary organizations into 
which he may later be guided. For the moment he is reporting on the activities 
and plans of URJE for street demonstrations in support of Velasco's attempt to 
nullify the Rio Protocol. 

ECCENTRIC. This agent is a physician, Dr. Felipe Ovalle, J with a history 
of collaboration with the US government that goes back to FBI days during 
World War II. Although he is a Colombian he has lived in Ecuador for many 
years where he has a modest medical practice, most of which comes from his 
inclusion on the US Embassy list of approved medical examiners for Ecuadorean 
applicants for visas. Ovalle's 201 agent file reveals that verification of his 
medical degree, supposedly obtained at a Colombian university, has proved 
impossible. Through the years he has developed a close relationship with 
President Velasco, whom he now serves as personal physician. Ovalle reports the 
results of his weekly meetings with Velasco to the station. Occasionally the 
information from this operation is interesting enough to disseminate in 
Washington, but usually the information is inferior to that of other agents. 

ECAMOROUS. The main station activity in security preparations for the 
Inter-American Conference is the training and equipping of the intelligence 
department of the Ecuadorean National Police. The intelligence department is 
called the Department of Special Services of the National Police Headquarters, 
and its chief is Police Captain Jose Vargas, } ECAMOROUS-2, who has been 
given special training here and in headquarters. Weatherwax, our case officer 
under Public Safety cover, works almost exclusively with Vargas, who has been 
in trouble recently for being the leader of a secret society of pro-Velasco young 
police officers. Secret societies in the police, as in the military, are forbidden. 

In spite of all our efforts, Vargas seems incapable of doing very much to help 
us, but he has managed to develop three or four marginal reporting agents on 
extreme leftist activities in his home town of Riobamba, a sierra provincial 
capital, and in Esmeraldas, a coastal provincial capital. Reports from these 
sources come ' directly to Vargas, and from him to the station, because there is 
little interest in this type of information further up the line in the Ecuadorean 



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government. On the contrary, with Araujo as the minister in charge of the 
National Police, intelligence collection by a police officer is a risky activity. 

Intelligence needs during the Inter-American Conference will have to be 
satisfied largely by the station directly through unilateral operations but before 
information of this kind is passed to Vargas it will have to be disguised to protect 
the source. Although strictly speaking ECAMOROUS is a liaison operation, the 
police intelligence unit is completely run by the station. Vargas is paid a salary by 
Noland with additional money for his sub-agents and expenses. Some technical 
equipment such as photo gear and non-sensitive audio equipment has been given 
to Vargas by the station, and we have trained his chief technician, Lieutenant Luis 
Sandoval. J 

Vargas is young and rather reckless but very friendly, well-disposed and 
intelligent. Although he is considered to be excellent as a long-term penetration 
of the National Police, he could be worked into other operations in the future. His 
first loyalty is undoubtedly to the station, and when asked he is glad to use his 
police position as cover for action requested by the station. 

ECOLE. This is the station's main penetration operation against the 
Ecuadorean National Police other than the intelligence side, and it also produces 
information about the Ecuadorean Workers Confederation (CTE). The principal 
agent, Colonel Wilfredo Oswaldo Lugo, } ECOLE, has been working with the 
US government since hunting Nazis with the FBI during World War II. Since 
1947 he has been working with the Quito station, and in the police shuffle and 
purge during Velasco's first weeks in office, Lugo was appointed Chief of the 
Department of Personnel of the National Police Headquarters. 

In contrast with the fairly open contact between Noland and Weatherwax and 
Captain Vargas, the intelligence chief, contact between Noland and Lugo is very 
discreet. The agent is considered to be a penetration of the security service and in 
times of crisis his reporting is invaluable, since he is in a position to give 
situation reports on government plans and reactions to events as reflected in 
orders to police and military units. 

Over the years Colonel Lugo has developed several agents who report on 
communist and related activities. Two of these agents are currently active and are 
targeted against the CTE. Their reporting is far inferior to PCE penetration agents 
such as Cardenas, Luis Vargas and Basantes, but they are kept on the payroll as 



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insurance in case anything ever happens to the better agents. Noland also pays a 
regular monthly salary to Colonel Lugo. 

ECJACK. About two years ago the Army established the Ecuadorean 
Military Intelligence Service (SIME) under Lieutenant- Colonel Roger Paredes, $ 
ECJACK, who then made contact with Noland. Paredes had been trained by the 
US Army at Fort Leavenworth some years earlier. In 1959, however, discouraged 
by the lack of support from his government for SIME, Paredes suggested to 
Noland that he might be more effective if he retired from the Army and worked 
full time with the station. At this point SIME was only a paper organization, and 
even today is still useless. 

Paredes's suggestion to Noland came just at the time the station 
investigations and surveillance team was discovered to be falsifying reports and 
expenses. The old ECSERUM team was fired and Paredes retired from the Army 
to form a new team. He now runs a five-man full-time team for surveillance and 
general investigations in Quito and, in addition, he has two reporting agents in 
the important southern sierra town of Loja. These two agents are on the fringes of 
communist activities there. 

Station direction of this operation is entirely through Lieutenant- Colonel 
Paredes, who uses the SIME organization as cover and as ostensible sponsor for 
the other agents in the operation. Another sub-agent is the chief of the identity 
card section of the Ministry of Government. As all citizens are required to 
register and obtain an official government-issued identity card, this agent 
provides on request the full name, date and place of birth, names of parents, 
occupation, address and photograph of practically any Ecuadorean. His main 
value is to provide this data for the station LYNX List, which is a list of about 
100 communists and other activists of the extreme left whom the station 
considers the most dangerous. The LYNX List is a requirement for all Western 
Hemisphere stations, to be maintained in case a local government in time of crisis 
should ask (or be asked by the US government) for assistance in the emergency 
preventive detention of dangerous persons. The ECJACK team spends part of its 
time updating addresses and place of employment of current LYNX List 
members and in getting the required information on new additions. 

The team is also used for following officers of the Cuban Embassy or for 
following and identifying persons who visit the Embassy. Their surveillance 
work is recognized by the station as clumsy and indiscreet, but plans call for 



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additional training, vehicles (they have no team transportation) and perhaps radio 
equipment. Paredes, of course, maintains close contact with military officers in 
SIME so that the station can monitor that service and confirm the reporting from 
the US Army Major who is the Military Assistance Advisory Group (MAAG) 
intelligence advisor. 

ECSTACY. In the central Quito post office, ECSTACY-1 J is the chief of 
the incoming airmail pouch section. As pouches arrive from Cuba, the Soviet 
bloc and Communist China, he sets them aside for his brother, ECSTACY-2, { 
who passes them to the station. John Bacon, the station reports officer, processes 
the letters and returns them the same day for reinsertion in the mails. Payment is 
made on a piecework basis. Processing requires surreptitious opening, reading, 
photography of letters of interest, and closing. Each week Bacon reports by 
dispatch the gist of the letters of main interest, with copies to headquarters and 
other interested stations. 

As most of the letters are from Ecuadoreans who are visiting the countries 
from which the letters are mailed, this postal intercept operation enables the 
station to monitor travellers to communist countries and their potential danger 
when they return. The letters also reveal leads to possible recruitment of 
Ecuadoreans who have been invited to visit communist countries, as well as 
those selected for scholarships to schools such as Moscow's People's Friendship 
University. Still other letters are from residents of the country where the letter 
originates, who are writing to Ecuadoreans who have visited that country. 
Attention is paid to possible political disaffection of the writers, for recruitment 
as agents in the country where the letter originates. 

Since the letter intake amounts to about thirty to forty letters per day, the 
ECSTACY operation is time-consuming for the station officer in charge. 
Nevertheless it is a valuable support operation and of considerable interest to the 
Cuban, Soviet, Eastern Europe and Communist Chinese branches in the DDP in 
headquarters. 

ECOTTER. Travel control is another standard support function enabling the 
station to monitor the movements of communists, politicians and other people of 
interest on the flights between Quito and other cities and on the international 
flights. ECOTTER- 1, J an employee of the civil aviation office at the Quito 
airport, passes copies of all passenger lists to ECOTTER-2, J who brings them to 



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the station in the Embassy. The passenger lists, which arrive in the station only 
one day after the flights, are circulated for perusal by each station officer and 
returned when the new batch is delivered. 

ECOTTER- 1 has arranged with airport immigration inspectors to note on the 
lists whenever a traveller's passport indicates travel to a communist country or to 
Cuba, and this information is reported to headquarters and indexed for station 
files. Any travel by people of importance, mainly local communists or 
communist diplomats, is reported to headquarters and appropriate stations and 
bases where the passenger list indicates they are travelling. 

ECTOSOME. The principal station agent for intelligence against the Czechs 
is Otto Kladensky, } the Oldsmobile dealer in Quito. His reporting has 
diminished since the Czechs were expelled three years ago, but now that relations 
have been reestablished he will undoubtedly be in close contact with Czech 
officials when they open a Quito Embassy. For the time being he reports on the 
occasional visits of Czech trade officials, and he provides the link to a high-level 
penetration of the Velasquista movement, ECOXBOW-1. 

ECOXBOW. Before this year's political campaign, Noland began cultivating 
a retired Army lieutenant-colonel, Reinaldo Varea Donoso, } ECOXBOW-1, 
whom he met through Kladensky. Recruitment of Varea, an important leader of 
Velasquistas in military circles proceeded with the assistance of Kladensky. 
Funds were provided by Noland via Kladensky for Varea's successful campaign 
for the Senate, and in August he was elected Vice- President of the Senate. He 
reports on military support for Velasco and he maintains regular contact with the 
leadership in the Ministry of Defence and the principal military units. 

Varea's station salary of 700 dollars per month is high by Ecuadorean 
standards but his access to crucial intelligence on government policy and stability 
is adequate justification. The project also provides funds for a room rented full- 
time in Kladensky's name in the new, luxurious Hotel Quito (built for the Inter- 
American Conference) where Kladensky and Varea take their playmates. Noland 
occasionally meets Varea in the hotel, but he is trying to keep the relation with 
Varea as discreet as possible by channelling contact through Kladensky. 

AMBLOOD. Early this year the Miami Operations base, cryptonym 
JMWAVE, was established to support operations against the Castro regime in 



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Cuba. The Havana station is preparing to continue operations from Miami when 
relations with Cuba are broken and the Embassy in Havana is closed. As part of 
the Cuban operation stay-behind procedures, the Quito station was asked to 
provide accommodation addresses for communicating with agents in Cuba by 
secret writing. Lieutenant-Colonel Paredes, the chief of the surveillance and 
investigative team, rented several post-boxes which have been assigned to Cuban 
agents who -are part of a team located in Santiago, Cuba. The chief of the team is 
Luis Toroella, J AMBLOOD- 1 , a former Cuban government employee who has 
been trained in the US and is now being sent back to Cuba to head the 
AMBLOOD team. 

The messages to Cuba are written in secret writing (SW) in Miami and 
forwarded by pouch to the Quito station where a cover letter is written by 
Francine Jacome, J ECDOXY, who is an American married to an Ecuadorean 
and who performs occasional support tasks for the station. The messages from 
Cuba to Quito are also written in a liquid SW system and are retrieved from the 
post-boxes by Paredes, passed to the station, and forwarded to the JMWAVE base 
in Miami. 

Quito Psychological and Paramilitary Operations (PP) 

ECURGE. The major station agent for placing propaganda is Gustavo 
Salgado, f an ex-communist considered by many to be the outstanding liberal 
political journalist in the country. His column appears several times per week in 
El Comercio, the main Quito daily, and in several provincial newspapers. Salgado 
also writes under pseudonyms for wider publication. 

Proper treatment of Ecuadorean and international themes is worked out in the 
station by John Bacon, who is in charge of this operation too, and passed to the 
agent for final draft. Headquarters guidance on propaganda subjects is also 
passed over in considerable volume and, on request from other stations, Salgado 
can comment on events in other countries to be later replayed there. 

Salgado is also extremely useful for publishing intelligence received from 
agent penetrations of the PCE and like-minded groups, and for exposing 
communist backing for disruptive activities. The agent is paid on a production 
basis. 



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ECELDER. Fly-sheets and handbills are a major propaganda medium in 
Ecuador and the ECELDER operation is a secret means for printing these kinds 
of throwaway notice. Five brothers, most of whom have other employment, 
divide the work of operating a small family printing business. The family name is 
Rivadeneira and the brothers are Marcelo, } Jorge, $ Patricio, } Rodrigo, | and 
Ramiro. } The brothers are well known in local basketball circles and have been 
the mainstays of the principal Catholic preparatory-school team, La Salle, in its 
traditional rivalry with the principal lay preparatory school, Mejia. Noland, who 
is also active in basketball circles, handles the contact with whichever brother is 
running the printing plant at a particular moment. 

The text of the fly-sheets is usually written in the station by John Bacon and 
passed to Gustavo Salgado for final draft. After printing they are given to a secret 
distribution team. The ECELDER printing plant is a legitimate operation with 
regular commercial orders. For the station handbills, fictitious print-shop 
symbols are often used because Ecuadorean law requires all printed material to 
carry the print-shop symbol. The shop also has symbols for the print shop used 
by the communists and related groups, for use when a station-written handbill is 
attributed to them. 

EC JOB. A team of Catholic university students directed by ECJOB-1 J is 
used to distribute the station handbills printed at the ECELDER shop. Because 
the handbills have false print-shop symbols and the team distributes without 
official permits, techniques for fast, efficient distribution are necessary. Usually 
several trucks are rented and as they move swiftly along the crowded Quito 
streets the handbills are hurled into the air. Several times team members have 
been arrested but ECJOB-1 has been able to buy their freedom without difficulty. 
None of the team except the leader himself knows about US Embassy 
sponsorship of the operation. 

The team is also used for wall-painting, another major propaganda medium 
in Ecuador. Usually the team works in the early hours of the morning, painting 
slogans on instruction by the station or painting out and mutilating the slogans 
painted by communist or pro-communist groups. Extreme caution is taken by the 
team in order to avoid street clashes with the opposition wall-painters who 
sometimes roam the streets searching for the anti-communists who spoil their 
work. John Bacon is also in charge of this operation. 



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ECACTOR. The most important station operation for anticommunist 
political action consists of funding and guidance to selected leaders of the 
Conservative Party and the Social Christian Movement. The operation developed 
from the most important station penetration agent of the Ponce government, 
Renato Perez Drouet, J who was Secretary-General of the Administration under 
Ponce and has since returned to manage his Quito travel agency Through Perez, 
the station now finances the anti-communist propaganda and political action of 
the Social Christian Movement, of which Perez is a leader. 

Before the 1 960 election campaign Perez proposed to Noland the support of 
a young engineer, Aurelio Davila Cajas, J ECACTOR- 1, whom Noland began to 
cultivate. Davila intensified his activities in the Conservative Party and with 
station financing he was elected in June to the Chamber of Deputies, representing 
the distant and sparsely populated Amazonian province of Napo. Davila is now 
the fastest rising young leader in the Conservative Party and very closely 
associated with the Catholic Church hierarchy which the party represents in 
politics. He is an outspoken and militant anti-communist and is considered by 
Noland, moreover, to have an enlightened stance on social reform. The station is 
now helping him to build up his personal political organization, which is 
branching out into student politics at the Catholic university. Normal 
communications between Noland and Davila, and the passage of funds, is 
through Renato Perez. In emergencies, however, messages and money are passed 
via Barbara Svegle, J the station secretary-typist, who rents an apartment in 
Davila's apartment-building where the agent also lives. 

Also through Renato Perez, Noland cultivated and eventually recruited 
Rafael Arizaga, J ECACTOR-2, who is the principal leader of the Conservative 
Party in Cuenca, Ecuador's third largest city. Through this agent Noland financed 
Conservative Party-candidates in Cuenca including the agent's son, Carlos 
Arizaga Vega, J ECACTOR-3, who was elected to the provincial council of 
Azuay — the province of which Cuenca is capital. Communications with this 
branch of the ECACTOR operation are difficult, but usually Noland travels to 
Cuenca for meetings although the principal agent may go to Quito. Funds 
channelled through this project are now being spent on anti-communist 
propaganda, student politics at the University of Cuenca, and local militant 
street-action by Conservative Party youth groups. 

Another agent has recently been added in order to fulfil the project's goals in 
Ecuador's fourth largest city, Ambato, another sierra provincial capital. The agent 



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is Jorge Gortaire, J ECACTOR- 4, a retired Army colonel who has recently 
returned from service on the Inter-American Defense Board in Washington. 
Gortaire is on the list of pro-Ponce military officers now being purged. In 1956 
he was elected as functional Senator for the Armed Forces, but he served only 
part of his term before being assigned by Ponce to the Inter- American Defense 
Board. In Washington he was cultivated by a CIA headquarters officer assigned 
to spot and assess potential agent material in the delegations to the Defense 
Board, and reports on Gortaire were forwarded to the Quito station. Noland has 
initiated contact with Gortaire and the Ecuadorean desk is processing clearance 
for use of this agent in anticommunist political action and propaganda in Ambato. 
Special importance is attached to this new agent because the mayor of Ambato is 
a Revolutionary Socialist and is using the municipal government machinery to 
promote infiltration by the extreme left there. Gortaire has excellent potential 
because he would be a likely candidate for Minister of Defence if Ponce is re- 
elected in the next elections. Meanwhile he will also be reporting on any rumours 
and reports of discontent in the military commands. 

ECOPTIC. The socialists, it will be remembered, have split into two rival 
groups: the Democratic Socialist Party of Ecuador (PSE) and the Revolutionary 
Socialist Party (PSR). Through his work in the University Sport League which 
sponsors one of the best Ecuadorean professional soccer teams, Noland met, 
cultivated and finally recruited Manuel Naranjo, J ECOPTIC- 1, a principal 
leader of the PSE. With financial support from Noland, Naranjo, an outstanding 
economist, was elected to the Chamber of Deputies in June, representing 
Pichincha (Quito) Province. Financial assistance is continuing so that this agent, 
like the others, can build up a personal political organization and influence his 
party to take desired action on issues such as communism and Castro, while 
fighting the PSR. 

ECBLOOM. Labour operations are perhaps the weakest part of the Quito 
station operational programme, although considerable potential exists in 
political-action agents such as Aurelio Davila and Manuel Naranjo. However, 
because of Velasco's appeal to the working class and the poor, Noland has 
continued to support a long-time agent in the Velasquista movement, Jose 
Baquero de la Calle. J Baquero has presidential ambitions and is the leader of the 
rightist wing of the Velasquista movement, closely identified with the Catholic 



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Church hierarchy. He is now Velasco's Minister of Labour and Social Welfare, 
and Noland hopes that non-communist labour organizations can be strengthened 
through his aid. His close identification with the Church, however, is restricting 
his potential for labour operations to the Church-controlled Catholic Labor 
Center J (CEDOC) which is a small, artisan-oriented organization. Noland pays 
Baquero a salary and expense money for his own political organization and for 
intelligence on the government and Velasquista politics. 

ECORT. Student operations are run for the most part from the Guayaquil 
base. However, the Quito station finances and directs the most important 
Ecuadorean anti- communist student newspaper, Voz Universitaria. % The agent in 
this operation is Wilson Almeida, % ECORT- 1, who is the editor of the 
newspaper. Almeida gives the publication a liberal orientation because the 
Catholic student movement is supported through Renato Perez, of the Social 
Christian Movement and Aurelio Davila of the Conservative Party. Propaganda 
against the Cuban Revolution and against communist penetration in the HUE 
(university students federation) is the main function of the ECORT newspaper. 

The following are the main operations of the Guayaquil base: 

Fl-CI Operations 

ECHINOCARUS. There are already increasing signs of a policy split in the 
Communist Party of Ecuador (PCE) over the problem of revolutionary violence 
v. the peaceful road to socialism. The PCE leadership grouped around Pedro 
Saad, the Secretary- General, generally favour the long struggle of preparing the 
masses, while the sierra leaders grouped around Rafael Echeverria Flores, leader 
of the Pichincha Provincial Committee, tend towards early initiation of guerrilla 
action and terrorism. Thus the communists themselves are beginning to split 
along sierra-coast lines, and the Guayaquil base is charged with monitoring the 
Saad group. 

The best of several base penetration agents is ECHINOCARUS- 1 J whose 
access is superior to cell-level, but far from the secrets of Saad's Executive 
Committee. The Guayaquil base is hoping to snare a really first-class penetration 
agent, or mount a productive technical penetration, on the basis of a new 
targeting study now underway. 



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ECLAT. The counterpart to the ECJACK surveillance and investigative team 
in Quito is the ECLAT operation in Guayaquil. This is a team of five agents who 
have access to government identification and police files. The team is directed by 
an ex-Army officer who also reports information picked up among his former 
colleagues in the coastal military garrisons. As in Quito, the investigative team in 
Guayaquil keeps the LYNX contingency list current for quick action against the 
most important-activists of the extreme left. 

ECAXLE. The main political intelligence collected by the base is through Al 
Reed, } an American who has spent a large part of his life in Guayaquil. He 
inherited a family business there, which has been doing rather badly, but he 
manages to keep close relations going with a variety of business, professional 
and political leaders. 

Guayaquil PP Operations 

ECCALICO. What the base lacks in intelligence collection is made up in 
labour and student operations. ECCALICO is the labour operation through which 
the base formed an organization to defeat Pedro Saad in the coast election of a 
Functional Senator for Labour earlier this year. The same organization forms the 
nucleus for a new coastal labour confederation that will soon be launched. 

The principal agent in the operation is Emilio Estrada Icaza, J the general 
manager of one of the country's largest banks. The main sub-agents are Adalberto 
Miranda Giron, J a leader of the Guayas Provincial Federation of Employees 
(white-collar workers) and the base candidate who defeated Saad; Victor 
Contreras Zuniga, % anti- communist Guayaquil labour leader; and Enrique 
Amador Marquez, J also an anti- communist labour leader. Through Estrada the 
base financed Miranda's electoral campaign, which mainly consisted of the 
forming and registering of new, anti- communist unions in the coastal provinces, 
mostly in Guayas (Guayaquil). The election was based on a point system 
weighted according to the numbers of workers in the unions recognized by the 
electoral court. Although the new unions registered through the operation were 
really only company social clubs, for the most part, and were generally 
encouraged by management as a result of the prestigious but discreet support 
from Estrada, the protests from the CTE and other communist- influenced labour 
groups were disallowed by the electoral court. On the contrary, just before the 



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election the electoral court disqualified some fifteen pro-Saad unions following 
protests from the ECCALICO agents. The balance swung in favour of Miranda, 
and he was elected. Blair Moffet, J the Guayaquil Base Chief, received a 
commendation from headquarters on this operation, which eliminated the PCE 
Secretary-General from a Senate seat he had held since the 1940s. 

The base plan now is to follow through with the formation of a new coastal 
labour confederation using the same unions, agents and cover as in the election. 
The CIA labour programmes and the ORIT labour representative will also be 
used, as they were in the electoral campaign, although they are not in direct 
contact with the base. The long-range strategy in labour operations, obviously, is 
to weaken the communist and revolutionary socialist-dominated CTE while 
establishing and strengthening the station and base-controlled democratic union 
structure. 

ECLOSE. Student election operations for control of the Ecuadorean 
Federation of University Students (FEUE) are run by the Guayaquil base through 
Alberto Alarcon, J ECLOSE, who is a businessman active in the Liberal Party. At 
different times each year, the five Ecuadorean universities elect new FEUE 
officers. An annual convention is also held when the national seat of FEUE goes 
in rotation from one university to another. Alarcon manages teams of agents at 
these electoral conventions, who are armed with anti-communist propaganda and 
ample funds for purchasing votes and other activities designed to swing the 
elections away from the communist and pro-communist candidates. Through this 
operation national control of the FEUE has been kept out of communist hands for 
several years, although communist influence is still very strong nationally and at 
several of the local FEUE chapters. Nevertheless, efforts to have the FEUE pull 
out of the communist International Union of Students in Prague, and to affiliate 
with the CIA-controlled COSEC J in Leyden, have been unsuccessful. 

Washington DC November 1960 

Tension and crisis prevail in the most important breakthrough in operations 
against the Cubans in Quito. In October the Cuban Embassy chauffeur, a 
communist, offered his services to the Embassy through an intermediary and was 
immediately picked up by the station. His motivation is entirely mercenary but 
his reporting so far has been accurate. His access is limited, of course, but he will 



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be an extremely valuable source for information about the Cuban diplomats 
which we can use in trying to recruit some of them. 

The problem is that the agent, ECALIBY-1, J missed a meeting several 
weeks ago and has also failed to appear for later alternative meetings. Blair 
Moffet, the former Guayaquil Base Chief who has gone temporarily to Quito 
until I arrive, is handling the case and has even checked at the agent's home. 
Nobody there knew anything of his recent movements. Moffet is afraid the 
chauffeur is in some kind of trouble because the ECJACK surveillance team has 
reported that he hasn't been showing up at the Embassy. For the time being 
Moffet will continue to work the alternative meeting-sites with extreme caution 
against a possible Cuban provocation. 

The station's campaign to promote a break in diplomatic relations between 
Ecuador and Cuba is stalled because Manuel Araujo, the Minister of Government 
and an admirer of the Cuban revolution, is the principal leader of Velasco's 
programme to denigrate the Ponce administration and to purge the government of 
Ponce's supporters. Araujo's campaign has been fairly effective, at least enough 
to keep our Conservative and Social Christian political-action agents, on whom 
we must rely for increasing pressure for the diplomatic break, on the defensive. 
Araujo has also been effective in his public campaign to equate support to the 
government with patriotism because of increasing tension over the Rio Protocol 
and the Peruvian boundary issue. 

Last month, for example, Araujo accused the Conservative Youth 
Organization, through which Aurelio Davila carries out station political-action 
programmes, of treason because it called on the Conservative Party to declare 
formal opposition to Velasco. Araujo was then called to the Chamber of Deputies 
by Conservatives to answer charges that he had violated the Constitution with his 
remarks about treason. The session lasted from 10 p.m. until 5 a.m. the next 
morning. Araujo, cheered on by the screaming Velasquista galleries which 
shouted down the Social Christians and Conservatives, turned the session into 
another denunciation of corruption in the Ponce administration. He even accused 
the forty-eight purged military officers of treason. Because of the deafening roar 
from the galleries' wild cheering for Araujo, the Conservative, Social Christian, 
Liberal and Socialist deputies who had planned to question him were forced to 
leave the session. 



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Araujo's new accusation of treason caused a big ripple in the military 
services, and the Minister of Defense and Velasco himself followed with denials 
that any of the officers were guilty of treason. 

Since those events of early October the Velasquistas have continued to equate 
patriotism on the Peruvian question with support for the government. Thousands 
turned out on 18 October in Guayaquil for a street demonstration to support 
Velasco and Araujo, and a similar mass demonstration was held in Quito the 
following day. On 20 October, the FEUE sponsored what was described as the 
most massive demonstration in the history of Quito. Students, government 
workers and people from all walks of life joined in the march and rally at a Quito 
soccer stadium where Velasco and others denounced the Rio Protocol. 

Early in November, Araujo was called again before the Congress to answer 
questions. He made the trip from his Ministry to the Legislative Palace riding a 
decrepit old horse that he claimed had been sold by Ponce's Minister of the 
Interior (a Social Christian and close station collaborator) to the National Police 
for 30,000 sucres — about 2500 dollars. He said the former Minister had made his 
brother appear as the seller and that the useless nag ought to be embalmed and 
placed in a museum as a monument to the Ponce Administration. 

During the ride from the Ministry to the Congress Araujo picked up a large 
crowd of followers — the spectacle of this physically deformed man less than five 
feet tall with a Van Dyke beard ridiculing the Poncista elite was just the sort of 
conduct that makes him so popular with the poor masses. The Velasquistas again 
packed the galleries to cheer Araujo wildly during his interpellation while 
shouting down any attempts by Conservatives or Social Christian legislators to 
criticize him. Later the same day a group of Velasquistas attacked a 
demonstration by a Conservative student group, and the police — controlled by 
Araujo as Minister of Government — first attacked the students and later 
persuaded the Velasquista mob to disperse. 

The day after the 'horse parade' Araujo nearly uncovered our EC JOB 
propaganda distribution team. Four of the team were distributing a fly-sheet 
against communism and Castro when by chance they were seen by Araujo 
himself. Araujo personally made the arrests, and our agents were charged with 
distributing flysheets without a print-shop symbol — the ECELDER print shop 
had erred in failing to use one of its fictitious symbols that take longer to trace. 
The distribution team leader couldn't buy their release this time so Noland had to 
get Aurelio Davila to use his Congressional leverage to get them out. 



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The station started a campaign to get Araujo thrown out, but it is progressing 
slowly. Through Davila a fly-sheet was circulated calling Araujo a communist 
because of his support for the Cuban revolution, but Velasquista agents like 
Baquero, the Minister of Labour, and Reinaldo Varea, J Vice-President of the 
Senate, haven't been able to shake President Velasco's confidence in Araujo. The 
campaign is difficult because it's bound together with the political battle of 
Velasco against the Conservatives and Social Christians — almost negating the 
effectiveness of our Velasquista agents against Araujo. Care is being taken, in the 
campaign through the rightist political agents like Davila, to focus on identifying 
Araujo with communism and to avoid criticizing Velasco himself. 

Our forces came off second best just a few days ago, however, when the 
Social Christians sponsored a wreath-laying ceremony in commemoration of the 
death of a student killed during Velasco's previous administration when police 
invaded a school to throw out strikers. During the days before the ceremony, 
which was planned to include a silent march, Araujo's sub-secretary denounced 
the ceremony as a provocation designed to cause a clash between Catholic 
students and the government. When the march arrived at the Independence Plaza 
in front of the Presidential Palace, groups of Velasquistas attacked with clubs and 
rocks. The marchers were forced out of the Plaza, and their floral offering left at 
the Independence Monument was destroyed. The Velasquista mob, now in 
control of the Plaza, cheered Velasco wildly when he returned to the Palace after 
a speech in another part of town. Numerous clashes followed during the 
afternoon and evening as the Velasquista mobs roamed the streets attacking the 
remnants of the Social Christian march which was also repressed by police 
cavalry. The government, however, clearly prefers to use its political supporters 
rather than the police to suppress opposition demonstrations, and the same tactics 
used in the Congress are now proving their worth in the streets. 

As if all this weren't bad enough, Araujo just expelled one of our labour 
agents: John Snyder, J the Inter- American Representative of the Post, Telegraph 
and Telephone Workers International J (PTTI) who for two years has been 
organizing Ecuadorean communications workers. Araujo accused him of 
planning a strike to occur just before the Inter- American Conference, but the real 
reason was a CTE request for Snyder's expulsion because he was so effective. 
Jose Baquero de la Calle, J our Minister of Labor, could do nothing to help — he 
just doesn't carry the weight with Velasco that Araujo carries. 



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The campaign against Araujo has been hampered by the crisis atmosphere 
over the boundary problem with Peru. In September Velasco sent his Foreign 
Minister to the UN General Assembly where he repeated the denunciation of the 
Rio Protocol because it was signed while Peruvian troops still occupied parts of 
Ecuador. The Minister added that Ecuador would raise the issue at the Inter- 
American Conference. Peru countered by calling for a meeting of the Guarantor 
Powers and threatening not to attend the Conference. The Guarantor Powers, 
including the US delegation, met in Rio de Janeiro in October but no public 
statement was issued. However, State Department documents at the Ecuador desk 
reveal that the Guarantors voted to disallow Ecuador's unilateral abrogation of 
the Protocol, but they followed with private appeals to both countries for a 
peaceful settlement. In early December, nevertheless, a public statement is going 
to be issued rejecting Velasco's position. The reaction in Ecuador will be strong — 
in Guayaquil in September our Consulate and the Peruvian Consulate were 
stoned because of the Rio Protocol. 

The station has received isolated reports that Velasco might turn to the 
Soviets or Cubans for support when he sees that the boundary issue is going 
against him. Moreover, the Minister of Education is suspected of having opened 
negotiations for an arms purchase during his recent trip to Czechoslovakia, 
although the announced purpose of the trip was for the purchase of technical 
equipment for Ecuadorean schools. 

In Ecuador the Congressional sessions are set by the Constitution from 10 
August until 7 October, but extension for up to thirty days is possible. This year's 
Congress voted the extended session, but in the battling between rightists and 
Velasquistas there was no significant legislation on any reforms, particularly 
agrarian reform, which had been one of the central promises of the Velasquista 
campaign. On the other hand repeal of the Civil Service Career Law set 
administrative reform back a few years. Worse still, the Congress in secret 
session just before going into recess, voted a 50 per cent increase in its own 
salaries retroactive to the opening of the session in August. The new amount is 
equivalent to 25 dollars per day — by Ecuadorean standards rather generous 
considering that two thirds of the population have a family income of only 10 
dollars per month. 

During the final two weeks before I was appointed to the Foreign Service I 
had to take a special course in labour operations. Although the course was 
supposed to be for mid-career labour operations specialists, the WH Division 



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training officer told me I was needed to fill a quota while he assured me that I 
wouldn't have to run labour operations just because the course is on my record. 

Nominally the course was under the Office of Training, but the people who 
really run it are from 10/4 (Branch 4, labour, of the International Organizations 
Division). The course was dominated by bickering between the 10 officers and 
the area division case officers over use of the labour agents controlled by 10 
Division under Cord Meyer. J Officers from WH Division were practically 
unanimous in condemning ORIT J which is the regional organization for the 
Western Hemisphere of the International Confederation of Free Trade Unions. J 
They said ORIT is hopeless, discredited and completely ineffective for attracting 
non-communist labour organizations in Latin America. Agency leaders (at the 
apparent urging of George Meany J and Serafmo Romualdi J) are convinced, 
however, that ORIT can be salvaged, and so WH Division must try to help. 

Much emphasis was given to the advantages of using agents in the different 
International Trade Secretariats in which, in Latin America at least, the Agency 
has considerable control. Lloyd Haskins, J Executive Secretary of the 
International Federation of Petroleum and Chemical Workers, } gave us a lecture 
on how he can help in organizing Latin American workers in the critical 
petroleum industry. Also having interesting possibilities for Latin America is the 
International Federation of Plantation, Agricultural and Allied Workers J 
(IFPAAW) which was founded last year to carry on the rural organizing begun 
several years ago through the ICFTU Special Plantation Committee which had 
special success in Malaya. In Latin America we use this union in a similar way to 
deny the peasant base of guerrilla movements through the organization and 
support of peasant unions within the larger area of agrarian reform and 
development of cooperatives. Overall, the course emphasized that Agency labour 
operations must seek to develop trade unions in underdeveloped countries that 
will focus on economic issues and stay away from politics and the ideology of 
class struggle. This is the Gompers tradition of American trade-unionism which, 
when promoted in poor countries, should raise labour costs and thereby diminish 
the effect that imports from low-cost labour areas has on employment in the US. 

After the labour course I took the two-week orientation course at the State 
Department's Foreign Service Institute. Although the course was generally 
boring, and I only took it because of cover requirements, it got me thinking about 
the place Agency operations occupy within the larger context of US foreign 
policy towards Latin America. There seem to be two main programmes that the 



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Latin American governments must promote: first, economic growth through 
industrialization; and second, economic, social and administrative reforms so that 
gross injustice can be eliminated. 

For economic growth they need capital, technology and political stability US 
government programmes are helping with these needs, particularly since Vice- 
President Nixon's trip two years ago: the Inter-American Development Bank was 
founded last year, Export-Import Bank financing is being increased, the technical 
assistance programmes of ICA are being expanded, and now the Social Progress 
Trust Fund is to be established with 500 million dollars from the US for health, 
housing, education and similar projects. From Kennedy's speeches on Latin 
America, some people conclude that these programmes will be expanded still 
more when he becomes President. 

CIA operations are crucial to the economic growth and political stability 
programmes, because of the inevitable capital flight and low private investment 
whenever communism becomes a threat. The Cuban revolution has stirred up and 
encouraged the forces of instability all over the hemisphere and it's our job to put 
them down. CIA operations promote stability through assisting local 
governments to build up their security forces — particularly the police but also the 
military — and by putting down the extreme left. That, in a nutshell, is what we're 
doing: building up the security forces and suppressing, weakening, destroying, 
the extreme left. Through these programmes we buy time for friendly 
governments to effect the reforms that will eliminate the injustices on which 
communism thrives. 

The Cuban Revolution has swung to the far left, the State Department, and 
American businesses, are fearful that Cuba will try to export its revolution to 
other countries in the hemisphere, which might result in nationalization of 
holdings. The top priority of the United States in Latin America is to seal off 
Cuba from the continent. In Quito, our orders are to do everything possible to 
force Ecuador to break diplomatic and economic relations with Cuba, and also to 
weaken the Communist Party there, no matter what the cost. 

For weeks Janet and I have been getting shots, for every known disease, I 
think, and she's been attending sessions on Foreign Service protocol and on 
what's expected of an embassy wife. Bob Weatherwax has been telling us a lot 
about housing and the life there. It sounds just too fantastic. He brought a 
Christmas shopping list from the Noland family and we're sending all their gifts 
down with our air freight. It won't be long now. 



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Today I made my last stop in the division on final check-out. It was in the 
Records Branch for assignment of pseudonym — the secret name that I'll use for 
the next thirty years on every piece of internal Agency correspondence: 
dispatches, cables, reports, everything I write. It will be the name by which I'll be 
known in promotions, fitness reports and other personnel actions. I signed the 
forms, acknowledging with my true name that in secret employment with the 
CIA I will use the assigned official pseudonym. Then I read the name — how can I 
miss with JEREMY S. HODAPP? 

Quito, Ecuador 6 December 1960 

Finally here. Out plodding DC-7 took over ten hours to get to Quito, 
including stops in Panama and Cali, but Janet and I were in the first-class section 
thanks to government policy allowing the extra expense for long flights. Former 
Ecuadorean President Galo Plaza, the Liberal Party leader who lost to Velasco 
this year, was sitting behind us and it would have been interesting to talk to him, 
but I was afraid it might seem presumptuous. 

The weather was clear and sunny as we approached Quito, and through the 
windows of the aircraft we could see snowcapped volcanos and green valleys that 
extended up the sides of mountains to what seemed like almost vertical 
cultivations. I wonder how they plough at such an angle. Everyone's heard of the 
Andes mountains but actually to see this breathtaking scenery is almost 
overwhelming. 

At the Quito air terminal, an ultra-modern building just completed for the 
Inter-American Conference, we were welcomed by Blair Moffet who gave us the 
Embassy orientation folder, mostly pointers on Ecuadorean health hazards. Then 
he dropped us at a small hotel in a residential section less than a block from the 
Embassy itself. A little while later Noland came to greet us with a pleasant 
surprise; he had tickets for us to see the bullfight this afternoon with his wife and 
some of their friends. 

Today is Quito's most important annual festival: the celebration of the city's 
liberation from Spanish rule. The festivities have been going on for some days 
with bullfights, parades and livestock shows. I'm not sure I liked the bullfight. It 
was exciting all right, and the music and oles were stirring, but if Paco Camino is 
really one of the world's best I wonder what second-raters are like. He practically 
butchered that bull trying to get him to fall. 



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Afterwards we went to a party with the Nolands at the home of the family 
that controls the movie theatres. Everyone there seemed to be related by blood or 
marriage, almost, and among the guests was Jorge Acosta, } Velasco's nephew 
and one of the station's best friends in the government. He runs the National 
Planning Board, not a terribly powerful job, but as President Velasco's family 
favourite he is not far from decision-making. Just recently Acosta advised that 
Weatherwax, our officer under Public Safety cover, can now return without 
danger. 

Tension on the political scene has increased,' if anything, in the past week. 
On 1 December the Quito Municipal Government, which is under Liberal Party 
control, began its new sessions. There was serious rioting between Liberal and 
Velasquista mobs, and when Araujo's police intervened they threw their first 
teargas grenade at the Liberal Mayor. 

Tomorrow the Guarantor Powers will release their decision denying 
Ecuador's claim that the Rio Protocol is void. Noland doesn't think the 
announcement will be taken calmly. 

Quito 8 December 1960 

They say it takes a while to get used to this 9000-feet-plus altitude. The air is 
thin and I seem to be unusually sleepy, but neither of us has had any sign of the 
terrible headaches some people get. The nights are cool, and there is quite a 
difference between being in the shade and the sunshine, but because it is so dry 
here, people wear woollen clothing even on hot days. The nicest thing about 
Quito, so far, are the flowers. It seems just like springtime, in fact, and someone 
told me that here there are only two seasons, wet and dry, but flowers all year. As 
soon as we can we're going to visit the monument north of town where the 
equator passes. It's about a half-hour drive and you can take photographs with 
one foot in the northern hemisphere and one in the southern. 

Noland says he wants me to take over the operations that Blair Moffet has 
been running so that he can return to Washington. But Blair said he can't return 
until he finds out what happened to the Cuban Embassy chauffeur. 

The announcement on the Rio Protocol was a bitter blow in the face of all the 
recent civic demonstrations and new hopes fomented by Velasco since he took 
office. A really big demonstration is being organized for tomorrow at the 
Independence Plaza. 



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Quito 9 December 1960 

Emotions have overflowed. Today, my fourth day in Quito, I saw my first 
mob attacks against a US Embassy I was late leaving the hotel and the manager 
warned me that rioters had already been stoning the Embassy When I arrived 
only a small group was still chanting in front, but I entered at the rear and saw 
that many windows were broken during the earlier raids. 

Throughout the day the station telephones were ringing as agents called to 
report the movements of the URJE-led rioters who returned to attack the 
Embassy a number of times. Araujo kept the police away, so the mobs could 
operate almost at will. I watched from the station offices on the top floor. Their 
favourite chant, as they hurled their stones, was: 'Cuba, Russia, Ecuador'. The 
Ecuadorean-North American Cultural Institute which is run by USIS and the 
Peruvian Embassy were also attacked, as was our Consulate in Guayaquil. 

While the Embassy was being attacked almost all the Quito buses suspended 
service and gathered north of town where they began a caravan into 
Independence Plaza picking up loads of people along the way. The Plaza was 
jammed with thousands when the speeches began, which included attacks on the 
Rio Protocol by Velasco and his Foreign Minister. Araujo, for his part, called for 
diplomatic relations with the Soviets if that were necessary for Ecuador to attain 
justice. The crowd chanted frequent denunciations of the Guarantor Powers and 
the OAS. Later the Foreign Minister announced that two Czech diplomats will be 
arriving shortly to open the Czech Legation here. 

Quito 14 December 1960 

Attacks against the Embassy have continued but they now seem smaller and 
more sporadic. Police protection has been improved and there were even some 
Army units sent to the Embassy. Araujo was forced to send the police protection 
back by cooler heads in the government like Acosta. The riots spread to other 
cities, too, where bi-national cultural centres were attacked. More public 
demonstrations have been held, the largest of which was yesterday when a 
'March of Justice' brought thousands again to the Independence Plaza. URJE 
continues to be the most important force behind the attacks although the marches 
and demonstrations are sponsored by a variety of organizations and are inspired 
mostly from civic motives. 



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Two important labour organizations have just been formed but for the time 
being only one is ours. In Guayaquil the ECCALICO agents who ran Miranda's J 
campaign to defeat the PCE General Secretary, Saad, as Functional Senator for 
Labour, held a convention on 9-11 December and formed the Regional 
Confederation of Ecuadorean Coastal Trade Unions } (CROCLE) as a permanent 
mechanism to fight the CTE on the coast, mainly in Guayas Province. Both of the 
principal-action agents, Victor Contreras } and Enrique Amador } are on the 
Executive Committee, Contreras as President. The ORIT representative was very 
helpful, especially in providing unwitting cover for our agents. The plan now is 
to affiliate CROCLE with the ORIT-ICFTU structure in place of the current 
Ecuadorean affiliate, the small and ineffective Guayas Workers Confederation 
(COG) which our Guayaquil base had been supporting. 

In Quito the USOM labour division, whose main work consists of giving 
courses in free trade-unionism throughout the country, has taken the first step 
towards the formation of a national, noncommunist trade-union confederation. 
Under their direction during the first week this month the Coordinating 
Committee of Free Trade Unionists of Ecuador was established. This committee 
will soon begin establishing provincial coordinating committees which will 
develop into provincial federations. Eventually a national confederation will be 
established. The station plan is to let USOM direct these early stages and later, 
after the new Deputy Chief of Station arrives, we will probably move in on the 
formation of the national confederation. For the moment, getting Miranda in the 
Senate and forming CROCLE are as much as we can manage. 

Bill Doherty, J the Inter-American Representative of the PTTI, J and another 
of 10 Division's international labour agents, arrived a few days ago to pick up the 
pieces from John Snyder's J expulsion. He's trying to arrange for continued PTTI 
support to the communications workers' union, FENETEL, } in organization, 
training and housing, but Araujo's hostility hasn't changed. Noland is reluctant to 
show our connections with Doherty to Baquero de la Calle, the Minister of 
Labor, by insisting on special treatment, but even if he tried, Baquero probably 
couldn't outmanoeuvre Araujo. 

Guayaquil student operations have also had a big success. The FEUE 
National Congress was held in Portoviejo earlier this month, and the ECLOSE 
forces under Alberto Alarcon J finally attained a long-sought goal. The Congress 
adopted a new system for electing officers of the various FEUE chapters. From 
now on the elections will be direct, obligatory and universal as opposed to the old 



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indirect system that gave the communist and other leftist minorities a distinct 
advantage. The national seat for the coming year will be Quito where FEUE 
leadership is in moderate hands. 

I've met Ambassador Bernbaum — he arrived only a few weeks before I did 
and this is his first post as Ambassador. He is a career Foreign Service man and 
not very colourful. Noland said he knows nothing about our operations, not even 
the political-action operations, and doesn't want to. Today the Ambassador visited 
Velasco with a message from Kennedy, and he took advantage of the visit to 
announce that loans for certain public works and development projects have been 
approved in principle by US lending institutions. The announcement is supposed 
to assuage anti-US sentiment. 

Press reports have alleged that several governments are seeking a 
postponement or change of site for the Inter-American Conference, partly 
because of the riots, and the Cuban press and radio are suggesting that Ecuador 
may follow Cuba in repudiating the Inter- American System. 

Quito 15 December 1960 

Aurelio Davila, J one of the main political-action agents of the ECACTOR 
project, won an important and clever victory today. He was behind a mass 
demonstration of support to Velasco's policy on the Rio Protocol which backfired 
on Araujo. Students from all the Catholic schools and the Catholic university 
marched to Independence Plaza where they chanted slogans against communism. 
Velasco was on the platform and the Minister of Defense had begun to speak 
when a small group of counter-demonstrators began chanting 'Cuba, Russia, 
Ecuador', which prompted a flurry of down with communism' from the mass of 
students. 

Araujo, who was also on the speaker's platform, descended to join the 
counter-demonstrators. Almost immediately a riot began and Velasco had to grab 
the microphone and ask for calm. The speeches continued, including one by 
Velasco, but the President was clearly annoyed at Araujo's having disrupted this 
huge demonstration of support. 

At the instigation of Davila and other Conservative Party leaders the Cardinal 
issued a pastoral letter which was released today. The Cardinal, whose influence 
is at least equal to that of any politician including Velasco, warns that religion 
and the fatherland are in grave and imminent danger from communism, adding 



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that Ecuador should not move towards Cuba and Russia in search of support on 
the boundary issue. 

Tonight another demonstration of support for Velasco's Peruvian policy was 
held — but it was by a leftist organization called the Popular Revolutionary 
Liberal Party (PLPR) which is an offshoot of the youth wing of the Liberal Party 
but with many Velasquista supporters. The speakers included Araujo and Gonzalo 
Villalba, a Vice-President of the CTE and one of the leaders of the Communist 
Party in Quito. They called for diplomatic and commercial relations with the 
Soviets while condemning the US and conservatives. 

Quito 16 December 1960 

Araujo's out! Late this afternoon it was announced at the Presidential Palace 
that Araujo's resignation had been accepted, but we had been receiving reports all 
day that Velasco was getting rid of him. We have poured out a steady stream of 
propaganda against him for some weeks and his behaviour at yesterday's 
demonstration clinched matters. The Foreign Minister, who is a good friend of 
the US, has also been working to get Araujo fired, and of course Araujo's own 
identification with the extreme left gave him little room to manoeuvre. 

Since Araujo's resignation was announced, street clashes have been 
continuous between his supporters, mostly from the URJE, and anti-Araujo 
Velasquistas. Right now the downtown area is full of tear-gas but we learn from 
several agents that the rioters are finally dispersing. 

Quito 22 December 1960 

Civic demonstrations on the Peruvian question have continued but they have 
lost their anti-US flavour. In fact they have almost been replaced by a campaign 
by Catholic groups to show support for the Cardinal in response to an attack 
against his pastoral letter on communism, made by the Revolutionary Socialist 
Labor Senator. Aurelio Davila is leading the campaign, funded from the 
EC ACTOR project, which includes letters and signatures published in the 
newspapers by Catholic organizations like CEDOC, the labour confederation, 
and the National Catholic Action Board, of which Davila is a Vice-President. 

Today the campaign reached a peak with a demonstration by thousands who 
marched through the Quito streets in the rain chanting slogans against Cuba, 



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communism and Russia. The Cardinal himself was the main speaker and he 
repeated his warning in the pastoral letter of the imminent danger of communism. 
He's almost ninety years old, but he's really effective. 

I've taken over my first operations and met my first real-live agents — at last 
I'm a genuine clandestine operations officer. 

The first operation I took over was ECJACK, the surveillance and general 
investigations team run by Lieutenant-Colonel Paredes. Blair took me out to meet 
him a couple of days ago, and through him I'm continuing to keep a watch near 
the Cuban Embassy for any signs of the missing chauffeur. With this operation I 
also took over the secret-writing correspondence with the agents in Cuba, and 
I've proposed to headquarters that we could save time if a trainer were sent to 
teach me to write and develop the letters. That way we could cable the messages 
and save the time required to pouch the SW letters. In a few days Noland will 
introduce me to Francine Jacome, J who writes the cover letters. 

Blair also turned over the ECFONE operation to me. The principal agent, 
Oswaldo Chiriboga, J was appointed Ecuadorean Charge d'Affaires to Holland 
and The Hague station is going to use him against Soviet and satellite diplomats. 
We had to get a new cutout to Basantes,; the Communist Party penetration agent, 
and Noland chose Velasco's physician, Dr Ovalle, J in order to sustain the cover 
story used from the beginning on this operation. Dr Ovalle will advise by 
telephone when he gets reports from Basantes, and I'll go to his office to get 
them. This operation took on even greater significance in October when Basantes 
was elected to the Pichincha Provincial Committee. With the schism growing 
between the PCE coastal and sierra leadership this is equivalent to having an 
agent on the local executive committee. 

The station seems to have turned into a Santa Claus operation these last few 
days. At Noland's house all the wives with their servants have been wrapping 
bonbons, cartons of cigarettes, boxes of cigars, bottles of whiskey, cognac, 
champagne and wine — and dozens of golf-balls. These are operational Christmas 
gifts to agents and to 'contacts' — (friends who might eventually be useful agents). 

Most officers in CIA stations are expected to develop personal relationships 
with as wide a variety of local leaders as possible, whether in business, 
education, professions or politics. State Department cover in WH Division 
facilitates the cultivation of these 'contacts' while station funds for entertainment, 
club dues, gifts and supplements to the regular housing allowances give us 
considerable advantages over our State Department colleagues. 



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Noland is clearly a great hit with the Ecuadoreans. He seems to know 
everyone in town who counts. He's a former college football star and coach with 
lots of personal charm and energy His wife is the national women's golf 
champion and an ex-Captain in the WAC'S. Together they are the most effective 
couple in the Embassy and are lionized by the local community Mostly they've 
developed these' contacts' through Noland's political and sports work and the 
very active role both have at the Quito Tennis and Golf Club. 

Quito 30 December 1960 

There seems now to be little doubt that the Inter-American Conference will 
be postponed. Peru insists it won't attend because of Ecuador's intention of 
raising the Protocol issue; Venezuela and the Dominican Republic are still in a 
crisis over Trujillo's attempt to assassinate Betancourt; and US-Cuban relations 
are getting still worse. We all know the invasion is coming but certainly not I 
until Kennedy takes over. 

Peru's break in relations with Cuba today hasn't helped prospects for the 
Conference. The break is partly a show of appreciation to the US for the October 
ruling by the Guarantors on the Protocol, but it's also the result of a Lima station 
operation in November. The operation was a commando raid by Cuban exiles 
against the Cuban Embassy in Lima which included the capture of documents. 
The Lima station inserted among the authentic documents several that had been 
forged by TSD including a supposed list of persons in Peru who received 
payments from the Cuban Embassy totalling about 15,000 dollars monthly. 

Another of the forged documents referred to a non-existent campaign of the 
Cuban Embassy in Lima to promote the Ecuadorean position on the Rio Protocol. 
Because not many Peruvians believed the documents to be genuine, the Lima 
station had great difficulty in getting them publicized. However, a few days ago a 
Conservative deputy in the Peruvian Congress presented them for the record and 
yesterday they finally surfaced in the Lima press. Although the Cubans have 
protested that the documents are apocryphal, a recent defector from the Cuban 
Embassy in Lima — present during the raid and now working for the Agency — 
has 'confirmed' that the TSD documents are genuine. The Conservative Peruvian 
government then used the documents as the pretext for breaking relations with 
Cuba. We could do something similar here but Velasco probably wouldn't take 



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action. He wants Cuban support against Peru on the Protocol issue, if he can get 
it. 

The disappearance of the Cuban Embassy chauffeur is now solved. He tried 
to impress the Embassy gardener by telling him about working for us. The 
gardener told one of the Cubans and the chauffeur was fired. He panicked and 
has been hiding out in a provincial village, convinced that the Cubans will try to 
kill him. 

He came into the Embassy yesterday and Blair met him. There's no saving 
the operation but Blair gave him a modest sum to get him back to the village and 
help him for a little while. Noland is really angry with Blair because he thinks 
Blair didn't take enough pains teaching the agent good security. Too bad — I was 
hoping I might get this operation too. Blair returns to Washington now. 

Quito 4 January 1961 

The Inter- American Conference will definitely be postponed now that the US 
has broken relations with Cuba. All cables and correspondence formerly sent to 
the Havana station are now to be sent to the JMWAVE station in Miami. I 
suppose the Conference won't be held until after the JMARC invasion by the 
exiles. Holding it after the Cuban revolution is wiped out will change the security 
situation here. For one thing we won't have the Cuban Embassy's support to 
URJE to worry about, and all these would-be protesters and agitators may not be 
so enthusiastic. 

Two Czech diplomats have just arrived to open a Legation. Headquarters had 
traces on only one of them who is a suspect intelligence officer. At headquarters' 
request we will watch closely, through agents like the Oldsmobile dealer, 
Kladensky, for indications on the permanent building they intend to buy or rent. 
Before their expulsion in 1957 we had their code -room bugged and headquarters 
wants to try again. 

Weatherwax, our Public Safety officer, is back and through him we hope to 
improve intelligence collection in rural areas, which is now almost nil. 
Contraband operations complicate the problem. Some areas, particularly those 
from just north of Quito to the Colombian border, live from the contraband 
traffic, and rural security forces, if they're not in the pay of the contraband rings, 
are often engaged in small wars against them. The weakness of rural security 
forces is practically an invitation to guerrilla operations, so we hope to strengthen 



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them through the Public Safety Mission and get some rural intelligence collection 
going at the same time. 

Quito 29 January 1961 

Today is the anniversary of the signing of the Rio Protocol and we thought 
we might get some attacks on the Embassy The only violence, however, was 
among the Ecuadoreans. In Guayaquil the Minister of Foreign Relations gave a 
speech on the boundary problem and in a procession afterwards to Guayaquil 
University he was jeered and booed as a traitor. Araujo and his friends in URJE 
are determined to get the minister fired because he was one of the forces behind 
Araujo's expulsion and he's also a good friend of the US. The campaign against 
him is based on his having been a member of the Ecuadorean commission that 
signed the Protocol in 1942. 

I've taken over the ECSTACY letter intercept from John Bacon. He has been 
using old-fashioned techniques that took a lot of time so I asked for a TSD 
photographic technician to come and overhaul the station darkroom where I have 
to process the letters. The TSD photographic and SW technicians have now both 
finished their work. The darkroom looks brand new. Everything's in order and the 
technician will send some new equipment in coming weeks. An SW technician 
has also come to train me to write and develop the messages to and from the 
agents in Cuba, and she left a supply of developer and ink pills. Now the Miami 
base will cable messages for me to send and I'll cable the incoming messages 
after development. 

Quito 1 February 1961 

Velasco's low tolerance of opposition is about to touch off another crisis. Two 
days ago at the opening ceremony of the National Medical Association 
Convention he, exchanged angry words with the Liberal Quito Mayor. Then 
yesterday, at the inauguration of a new fertilizer plant where both were present 
Velasquistas hissed and booed the Mayor and threw tomatoes at him, forcing him 
to leave the ceremony. Last night supporters of both Velasco and the Mayor held 
street demonstrations and the Minister of Government is making threats against 
people who disturb public order — not to be mistaken for the Velasquistas, of 
course. 



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Today the Minister of Government closed a Quito radio station under an 
administrative pretext (failure to renew its licence on time) following an opinion 
programme in which listeners were encouraged to call and participate in the 
programme by expressing their support for the Mayor. The Minister himself 
called the radio station during the programme and his threats against the station 
were broadcast as part of the programme. Later he closed the station. More 
Velasquista street demonstrations tonight. 

Quito 8 February 1961 

There has been a serious uprising at a large hacienda in Chimborazo 
Province south of here. Some 2000 Indians turned against the hacienda owner 
and the local authorities. Three policemen were injured, the Army was called out, 
two Indians were killed and over sixty arrested. The leaders of the Indians were 
organizers from the Campesino Commission of the CTE, and the Revolutionary 
Socialist Labor Senator (also a CTE leader) has started a campaign for the 
Indians' release. 

The Indians' grievances were legitimate enough — they often are badly treated 
on these enormous estates. In this case the owner hadn't paid them since last year 
and wasn't keeping accounts of their daily work. The CTE is also demanding an 
investigation into alleged torture of the Indians who were arrested, and 
recognition of their demands: wages, housing and schools. 

Several people have told me that this is the type of incident that chills the 
blood of the landowners here. If only one of these risings got out of hand and 
began to spread there would be no telling where it would end. Probably right in 
the Presidential Palace. 

Quito 15 February 1961 

Our new Deputy Chief of Station, Gil Saudade, % arrived early this month. 
He's taking over the labour and student operations but Bacon will keep the 
ECURGE media operation. Saudade and I are working closely on preparing 
agents to send to the Latin American Conference for National Sovereignty, 
Economic Emancipation and Peace, scheduled for the first week of March in 
Mexico City. 



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Gil's agents are Juan Yepez del Pozo, Jr., J ECLURE-2, and Antonio Ulloa 
Coppiano, J ECLURE-3. Until he arrived they were treated as developmental 
prospects by Noland who was helping finance their takeover of the Popular 
Revolutionary Liberal Party J (PLPR). This party is attracting a considerable 
following among young supporters of Velasco, and we hope to use it to channel 
these radicals away from support to Cuba and from anti-Americanism. Araujo's 
supporters are among those we most hope to attract, and Gil will be certain that 
the party keeps its leftist character and firm opposition to the traditional 
Ecuadorean political parties. The agent really in control is Juan Yepez del Pozo, 
Sr., J a writer who is also director of the Ecuadorean Institute of Sociology. He 
has larger political ambitions and is the party's chief advisor. 

The Conference in Mexico City is sponsored by the leftist, former President 
of Mexico, Lazaro Cardenas, as a propaganda exercise in support of the Cuban 
revolution. Because communists and leftists from all over the hemisphere will be 
there, headquarters asked stations months ago to propose agents who could attend 
for intelligence gathering. 

Besides Gil's agents, we're sending Atahualpa Basantes, J one of our best 
PCE penetration agents. Both headquarters and the Mexico City station were 
pleased that he can attend, and I've sent requirements to him in writing through 
Dr Ovalle. If possible he will try to get invited for a visit to Cuba after the 
Conference is over. 

Our propaganda operations have been promoting considerable comment 
adverse to Cuba. The general theme is the danger of penetration by international 
communism in the Western Hemisphere through Cuba, but recently specific 
stories have highlighted statements by Cuban exile leaders Manuel de Varona J 
and Jose Miro Cardona. J Alarmist accusations of Cuban subversive activities 
included one report coming from Cubans in Miami that Castro has sent arms to 
guerrillas in Colombia and arms to Ecuador to use against Peru — these stories 
originally surfaced in El Tiempo in Bogota and were repeated in El Comercio in 
Quito. Still another story which came from Havana alleged that Castro's efforts to 
penetrate South America are concentrated mainly through Ecuador and Brazil. 
This story also accused Castro of contributing 200,000 dollars to the Mexico City 
Conference. Araujo has helped our propaganda operations by appearing on 
television in Havana and promising the support of the Ecuadorean government 
and people to the Cuban revolution. The reaction here was strong, and both 
Velasco and the Foreign Minister issued statements rejecting Araujo's generosity. 



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Gustavo Salgado, J the well-known columnist, is placing most of this 
material for us, and he also arranged for a replay of follow-up propaganda about 
the exile assault on the Cuban Embassy in Lima last November. The commando 
leader has recently been interviewed by the Agenda Orbe Latinoamericano % 
news service which is a hemisphere-wide propaganda operation of the station in 
Santiago, Chile. He said that other documents captured during the raid (besides 
the list of Peruvians paid by the Cuban Embassy in Lima) revealed that Cuba was 
using certain Peruvians and Ecuadoreans in the hope of setting off an armed 
conflict between the two countries, which in turn would prepare the atmosphere 
for a communist rising in Peru. In his column today Salgado rehashed the 
background and the interview and called for the publication of the names of the 
Ecuadoreans working in this Cuban adventure. Araujo, of course, would be first 
on the list. The 'other documents' are, of course, also Agency produced. 

The purpose of the campaign is to prepare public opinion so that reaction to 
the Cuban invasion, when it comes, will be softened. Other stations in Latin 
America are doing the same, but here we can also tie the propaganda to Cuban 
interference in the boundary dispute. 

Quito 18 February 1961 

Velasco is reacting strongly to the leftist campaign to force the Foreign 
Minister to resign, and some of our reports suggest this may be the beginning of 
the end for his fourth term. 

Yesterday morning the Foreign Minister had accompanied a distinguished 
Colombian jurist (an expert in international law and proponent of the Ecuadorean 
thesis on the nullity of the Rio Protocol) to the Central University where he had 
been invited to speak. As they arrived several hundred students began jeering the 
Foreign Minister and throwing tomatoes at him. Several tomatoes hit him but he 
found shelter in the building and the Colombian made his speech. Velasco was 
furious because the scandal has upset his propaganda campaign for using the 
Colombian against Peru, even though it was the Foreign Minister who was 
attacked. 

Today the government arrested five URJE members for taking part in the 
incident, which in turn has caused another spate of protests. The CTE condemned 
the arrests and also demanded freedom for the PCE Indian organizer Carlos 
Rodriguez, who is in jail in Riobamba over the recent Chimborazo Indian rising. 



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The Revolutionary Socialists are protesting because three of those arrested are 
members of its youth group. The FEUE is protesting because the five arrested are 
university students. The protests include demands for the resignations of both the 
Foreign Minister and the Minister of Government, the latter for illegal arrest of 
the students and the closing of the radio station on 1 February. 

Quito 20 February 1961 

This has been a day of great violence. Yesterday the Minister of Government 
ordered the release of the five students but they refused to leave the jail. They 
demanded a habeas corpus hearing because that would be held under the Quito 
Mayor and could be used to embarrass Velasco and force the resignation of the 
Minister. During the early hours of this morning the students were forced into 
police cars and driven separately to isolated sectors of town where they were 
forced out of the cars. 

The law and philosophy faculties led by members of URJE began an 
indefinite strike this morning for the resignations of the Ministers of Government 
and Foreign Relations. 

The strike committee is supported by the Quito FEUE leadership which has 
called a forty-eight-hour strike for the whole university, and the university 
council headed by the rector has issued its own protest against the government. 

After the strike was announced this morning a Velasquista mob composed 
mostly of government employees in the state monopolies and customs service 
gathered at the downtown location of the philosophy faculty. After a verbal 
confrontation with the striking students the mob began stoning them to force 
them inside the faculty building. For much of the morning they continued to 
control the streets around the faculty and to menace the students with terrible 
violence. 

The university administration and the students formed a special committee to 
visit the Minister of Government to plead for police protection for the striking 
students against the mob. The minister simply advised that the government would 
not move against the strikers, leaving open the question of police protection. 

About five o'clock this afternoon the mob gathered again, this time in 
Independence Plaza where they chanted praise to Velasco and condemnation of 
the students. From there they marched to the Ministry of Government where the 
minister spoke to them from a balcony, saying he had acted legally in arresting 



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the jive students for throwing tomatoes at the Foreign Minister, but that no 
sooner were they released than they declared a strike. 

I've had the surveillance team under Colonel Paredes scattered about the 
downtown area since the strike began this morning. Paredes has given us their 
reports on the movements of the mob and the danger that the students might be 
lynched. We've cabled reports to headquarters but Noland isn't making 
predictions yet on whether Velasco will last — he thinks there will have to be 
some bloodshed before the military gets restless. 

Quito 21 February 1961 

Guayaquil was the centre of today's action. A street demonstration by FEUE 
and URJE this morning was attacked by Velasquista mobs controlled by the 
Mayor (unlike Quito, in Guayaquil the Mayor is a powerful supporter of 
Velasco). The marchers were forced several times to seek refuge in the buildings 
of Guayaquil University when shots were fired from the mob. Police eventually 
broke up the clash with tear-gas, and university authorities have protested to the 
government and asked for protection for the students. 

Another demonstration by the students in Guayaquil was held tonight and 
was again attacked by Velasquista mobs. Eventually the marchers returned to the 
university and who should be the main speaker but Araujo! He had just returned 
from Cuba today and was carried by the students on their shoulders from his 
hotel to the university. In his speech he lavished praise on the Cubans and 
described recent protest demonstrations in Havana against the killing of Patrice 
Lumumba. 

Manuel Naranjo, $ Noland's agent who is a Deputy of the moderate Socialist 
Party, got the party to publish a statement today criticizing the role of URJE in 
the student strike and in the tomato attack against the Foreign Minister. Wilson 
Almeida, J the editor of our main student propaganda organ Voz Universifaria, 
also published a statement against URJE participation and in support of the 
Foreign Minister. The Velasquista association of professionals published a 
statement supporting the Minister of Government. 

The main propaganda item today, however, was from the Cuban Embassy 
which released a sensational statement alleging that during the coming Holy 
Week attacks will be made against religious processions by persons shouting 
'Viva Fidel, Cuba and Russia'. Blame for the attacks would be placed on the 



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Cuban Embassy. In the statement the Cubans also denied the allegation circulated 
recently that sixty Cubans had come to Ecuador to make trouble — adding that 
agents paid by the US are entering the country from Peru. The statement also 
tried to clarify Araujo's television remarks in Havana as an expression of 
solidarity between Ecuadoreans and Cubans such as Velasco has repeatedly 
expressed. The statement went on to defend the Cuban photographic exhibit now 
on display in Quito as expressive of the works of the revolution, not communist 
propaganda as suggested in recent rightist criticism of the exhibit, adding that the 
exhibit is sponsored by the CTE, the National Cultural Institute and Central 
University as well as the Embassy. The statement ended by alleging that all these 
recent provocations are designed to disturb the good relations between Cuba and 
Ecuador and to impede Cuban participation in the Inter-American Conference. 
The real culprit, according to the statement, is the US government with assistance 
from Peru because of Cuba's support to Ecuador on the Rio Protocol issue. The 
statement ended with words of praise for Velasco. 

From what I gather this is an extraordinary statement for a diplomatic 
mission to make. It shows among other things, that our propaganda is hurting the 
Cubans, and Noland hopes to get the political-action agents like Renato Perez 
and Aurelio Davila to charge the Cubans with meddling in Ecuadorean politics. 

Quito 22 February 1961 

In response to the Cuban press release yesterday, our Ambassador issued a 
statement today that had everyone in the station smiling. The Ambassador said 
that the only agents in Ecuador who are paid and trained by the United States are 
the technicians invited by the Ecuadorean government to contribute to raising the 
living standards of the Ecuadorean people. He added that the US has promoted a 
policy of order, stability and progress as demonstrated in our technical and 
economic assistance programmes, and he suggested that the Cuban Embassy 
present their accusations and appropriate proof to the Ecuadorean government. 

In Havana the Cuban Embassy statement has been prominently replayed for 
distribution over the whole continent, with emphasis that collaboration between 
the US and Peru is part of a plan to isolate Cuba from the rest of Latin America 
and to impede Cuban participation in the Inter-American Conference. They 
couldn't be more accurate on the matter of isolation — that's the central theme of 
our propaganda guidance. 



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Today Guayaquil had the worst violence yet. The striking students in the 
university buildings were attacked by a much larger group of Velasquista students 
and government employees who forcibly ejected the strikers. Eight people were 
hospitalized before the morning was over. In the afternoon two bombs caused 
extensive damage at the Guayaquil Municipal Palace, although there were no 
victims, and another bomb was reported by the Mayor's office to have been 
hurled through a window into his office but without exploding. Expressions of 
support to the Mayor have begun to pour in, and tonight he announced that 
terrorists had tried to kill him. The Guayaquil base reported that several of their 
agents believe the bombs were planted by the Mayor himself. 

Press reports confirmed by our National Police agents indicate opposition to 
the government has spread to Cuenca. Yesterday a group of students held a march 
to the provincial governor's office to plead for payment of certain money that is 
due to the school. They had nothing to do with the strikers here or in Guayaquil, 
but police didn't know this and the march was attacked by the cavalry with sabres 
and several students were wounded. Cuenca is a very conservative city and this 
was bound to cause a reaction against Velasco. Today the university students held 
a demonstration of support for the students in Quito and Guayaquil, and in 
protest against the police stupidity yesterday. They also joined in the call for the 
resignation of the two Ministers. 

Quito 23 February 1961 

Important efforts by the ECACTOR project agents, especially Aurelio 
Davila, to focus attention on communism and Cuba are getting results. Today the 
Cardinal issued another pastoral letter — this one signed by all the archbishops, 
bishops and vicars in the hierarchy. Davila had been rallying the leadership of the 
Conservative Party to call on the Cardinal for this new letter for some weeks. The 
letter calls on all Catholics to take serious and effective action against the 
communist menace in Ecuador, while accusing the communists of trying to take 
advantage of the border problem for their own subversive purposes. The letter 
also laments the weakening of the Ecuadorean case on the border issue because 
of these communist tactics. 

More important still was the call today by the Conservative Party for a break 
in diplomatic relations with Cuba. This is the first formal call for a break with 



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Cuba by any of the political parties, and it is based partly on the Cuban Embassy 
statement of two days ago. 

The new pastoral letter and the call for a break in relations are designed to 
use patriotism and the border issue rather like Velasco does, but more subtly, in 
order to discredit the extreme left and the Cubans. We hope a wave of mass 
opinion can be created, especially among Catholics, that will equate URJE, 
Araujo, the CTE and the PCE — and the Cuban Embassy of course — with divisive 
efforts to weaken Velasco's campaign against the Rio Protocol. Hopefully this 
will strengthen the Foreign Minister's position and suck Velasco himself into the 
current. But because of Velasco's attacks against the political right, the animosity 
is so great that he may resist and lash out again at our ECACTOR crowd. In that 
case we will simply continue the campaign through all our propaganda 
machinery to deny the enemy the banner of patriotism on the Protocol issue. 

Through the same political-action agents we are promoting the formation of 
an anti-communist civic front that will concentrate on getting a break in relations 
with Cuba and on denouncing penetration of the Ecuadorean government by the 
extreme left. Right now the signature campaign is coming to a close and 
formation of the front will be announced in a few days. 

John Bacon is starting a new programme through Gustavo Salgado, J his 
main media agent, which will consist of a series of 'alert' notices to be placed in 
the newspapers as paid advertisements against communism, the Cubans and 
others. They will be short notices, and if Bacon can write them fast enough they'll 
appear two or three times each week. The ostensible sponsor will be the non- 
existent Ecuadorean Anti-Communist Front, not to be confused with the political- 
action civic front which is going to be a real organization. 

Quito 28 February 1961 

Yesterday was National Civics Day and suddenly it seemed that the whole 
country had forgotten its internal hatreds in the government- promoted 
demonstrations against Peru. The demonstrations were sharply anti-Peruvian 
because in recent days regular accusations have emanated from Lima that 
Ecuador has accepted support on the boundary problem from Castro and 
communism in general. The accusations are inspired by the Lima station in order 
to preclude Cuban support to Ecuador and Ecuadorean acceptance if support 
were ever offered. 



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Today things were back to normal. Our ECACTOR-fmanced anti-communist 
civic front was launched with a two-page newspaper notice containing about 
3000 signatures and announcing the formation of the National Defense Front. { 
In the statement at the beginning, the signatories, mostly Conservatives and 
Social Christians, denounce communist penetration of the government, the CTE 
and the FEUE, together with the selection of Ecuador by the international 
communist movement as the second target after Cuba for conquest in America. 
The purpose of the Front is described as defence of the country against 
communist subversion, and the first objective is the break in relations with Cuba. 

Although the political colouring of the rightist forces behind the Front is well 
known, Noland hopes that the Front will have more manoeuvreability than the 
political parties because it focuses on only one political issue: communism and 
Cuba. As such the Front should be a more effective tool for pressure on Velasco 
to break with Cuba and curb URJE, Araujo, the CTE and the rest. This will take 
some doing — in a speech in a provincial capital today Velasco said that 
communism in Ecuador is impossible. Today El Salvador became the seventh 
Latin American country to break with Cuba. 

Quito 5 March 1961 

The student strikes have subsided and Velasco seems to have survived 
although opposition to him is growing steadily, particularly among the poor 
classes who voted for him, because of inflation and corruption in the government. 

Our propaganda operations relating to communism and Cuba are intensifying 
opposition to Velasco among the rightists, if that's possible. With financing from 
the EC ACTOR and ECURGE projects, we've been turning out a stream of 
handbills, editorials, declarations, advertisements and wall-painting, mostly 
through Salgado and the National Defense Front. Bacon's' alert' notices in El 
Comercio have also started. 

Because of a new spate of rumours that the Inter- American Conference will 
be postponed, the government has issued several statements on its determination 
to maintain order at the Conference. Nevertheless, only on 1 March were the first 
arrests made in Guayaquil for the 22 February attack against the university 
strikers. A higher court forced the lower court to take action and those arrested 
were revealed to have been commanded by an assistant to the Guayaquil Mayor. 



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The FEUE and URJE leaders arrested during the strike have also been released. 
This won't help the Conference. 

The Mexico City Conference on National Sovereignty, Economic 
Emancipation and Peace opened today. Three of the five Ecuadorean delegates 
are our agents: if this were the case with all our stations the possibilities would be 
endless. No word yet on whether Basantes, my PCE penetration agent, will go on 
to Cuba. 

Quito 7 March 1961 

The Soviet Ambassador to Mexico arrived in Quito today for a goodwill 
visit. He'll be here for about three days, discussing, among other things, 
Ecuador's desire to sell bananas to the Soviets. We have a programme planned for 
disruption and propaganda against him. It began today with a statement by the 
National Defense Front calling for his expulsion. Another announcement 
arranged by Davila is from the Catholic University Youth Organization, 
denouncing the millions of dollars spent each year by the Kremlin to infiltrate 
Latin America, adding that the budget against Ecuador for propaganda, agitators' 
salaries, secret go-betweens and instructors in sabotage, explosives and weapons 
is 250,721.05 dollars. 

John Bacon's 'alert' is directed against this visit. It runs: 

On the alert, Ecuadoreans, against communist agitators! The official Soviet 
newspaper is Pravda — which means Truth, one of the tremendous sarcasms of 
contemporary history. 

If we unmask the actors of this farce, we will find that it is not the plain truth, 
but distorted, calumnied truth. That's Russia and that's communism. And that is 
now Cuba and Fidelism. Disciples used by the great international fakes, and at 
the same time masters in deceit and subversion, try to introduce methods in 
Ecuador similar to those that their dictatorship employs. First, in order to avoid 
being responsible, the authorized agents wash their hands like Pilate even though 
the first terrorist bombs are heard elsewhere. Alert, Ecuadoreans, there is 
friendship that could dishonour us. 

Still he has run into a problem in this campaign of 'alert' notices attributed to 
the Ecuadorean Anti-Communist Front. He was surprised to read this morning 
that a real organization with that name has been founded. They published their 
first bulletin today with the theme: 'For Religion and the Fatherland We Will 



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Give Our Lives'. The symbol of the group is a condor destroying with his 
powerful claws a hammer and sickle. 

Quito 10 March 1961 

Six anti-communist organizations including the National Defense Front have 
been denied permits to hold street demonstrations against the Soviet Ambassador. 
Nevertheless, Davila sent some of his boys around to the Hotel Quito the other 
night and they made a small fuss. Police protection of the Soviet delegation is 
considerable and so far there's been no violence. 

The Soviet Ambassador has seen the Ministers of Foreign Affairs and 
Education as well as President Velasco, and it was announced that an Ecuadorean 
commercial mission will soon visit the Soviet Union. The government wants to 
sell bananas, Panama hats and balsa wood in exchange for agricultural and road 
building equipment. The overwhelming police protection, which has included the 
cavalry, when the Ambassador visits colonial churches and other tourist sites, is 
helping our propaganda campaign. 

Today's 'alert' notice was also against the Soviets: 

Alert, Ecuadoreans! Communism enslaves. Communism imposes the hardest 
slavery known through the centuries, and once it is able to enslave a people it is 
very difficult for the victim to break the chains. 

Hungary tried in 1956. The valiant Hungarians in an unsuccessful and heroic 
struggle rose up demanding bread and freedom. But they were destroyed by 
Soviet tanks that massacred more than 32,000 workers and reduced the whole 
country to still worse slavery. In this terrible crime against humanity the puppet 
traitor Janos Kadar went over to the side of the muscovite hordes that 
assassinated his brothers and enslaved his fatherland. Alert! There are puppets of 
the same kind who want to sell out Ecuador. 

Tonight the Defense Front held an indoor rally at a theatre where Velasco 
was attacked for his permissive policies towards communism, particularly his 
continued favouritism towards Araujo. He was also attacked for inflation and the 
increased benefits for representation and housing given to members of his 
Cabinet. After the rally, participants were attacked in the street by a mob of 
Velasquistas and URJE members shouting vivas to Araujo. Our Embassy- 
sponsored bi-national cultural centre was stoned and shots were fired at the home 
of a Social Christian leader. 



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If the opposition to Velasco over Cuba and communism is getting serious, it's 
even more serious over economic policy. In the past three days the Monetary 
Board (comparable to the US Federal Reserve Board) has reversed the fiscal and 
economic policies begun when Velasco took office — largely because of the 
growing opposition of the sierra Chambers of Agriculture, Commerce and 
Industry. 

The problem derives from the competing economies of the coast and sierra 
and from Velasco's having placed monetary policy in the hands of Guayaquil 
Velasquista leaders. Just after the election these people started a campaign against 
the old leadership of the Monetary Board and the Central Bank which under 
Ponce had followed policies of stability through tight money and balanced 
foreign trade. The coastal Velasquista leaders, however, claimed that such 
policies were strangling economic development and they proposed expansion of 
the money supply. When Velasco took power this group received the most 
important government financial positions, including the Ministries of Economy 
and Development, and eventually the chiefs of the Monetary Board and the 
Central Bank resigned and were replaced by people from the same Guayaquil 
financial circle. 

Quito 11 March 1961 

The Peace Conference in Mexico City is over, and a cable arrived from the 
Mexico City station advising that Basantes has been able to get an invitation to 
visit Cuba. He will be there for two or three weeks at least, and when he returns 
to Mexico City he'll be debriefed by an officer from the Miami station. The 
Mexico City station was quite pleased with our agents' work at the Conference. 
The Conference adopted the predictable resolutions: support to the Cuban 
revolution; annulment of all treaties that tend to revive the Monroe Doctrine; 
opposition to the military, technical and economic missions of the US in Latin 
America; nationalization of heavy industry and foreign companies: establishment 
of cultural and diplomatic relations with the Soviet bloc and Communist China; 
support to Panama in its efforts to gain possession of the Panama Canal. 

Since most visitors of importance to Quito stay at the Hotel Quito I suggested 
to Noland that we could provide better coverage of their visits by taking 
advantage of the US company that manages the hotel in order to bug the rooms. I 
suggested that we get a couple of the standard hotel lamps and send them to 



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headquarters for installation of transmitters that we will be able to monitor from 
other rooms in the hotel. Through the American manager (whom we all know) 
we can get the lamps placed in the appropriate rooms before the guests arrive. 

Noland liked the idea and is going to get two lamps through Otto Kladensky 
J who rents the room used in the operation with Reinaldo Varea, J Vice-President 
of the Senate. After we get them back we'll decide whether to use the manager or 
some other means for placing them. I'm going to suggest battery-operated 
equipment so that it will work if the lamp is unplugged. 

Quito 15 March 1961 

President Kennedy's speech to the Latin American Ambassadors in 
Washington on the Alliance for Progress has caused much excitement here and 
almost unanimously favourable comment. We're using Castro's speech the day 
after Kennedy's against him: he said the Cuban revolution is supported by 
Ecuador, Uruguay and Brazil. Through the National Defense Front we're 
generating continuous propaganda against Velasco's policy on Cuba which may 
well be what caused the stoning of Ponce's house two nights ago. The attackers 
got away but they were probably Velasquistas. 

Other propaganda is generated through coverage of the Cuban exiles. We are 
getting fairly good presentation of the bulletins of the main exile group, the 
Revolutionary Democratic Front, { and statements made by exiles when they 
arrive, usually in Guayaquil, but so far Noland hasn't wanted to get into direct 
contact with Cuban exiles in Ecuador. 

Noland is financing the formation of the Anti-Communist Christian Front in 
Cuenca, Ecuador's third largest city. The principal agent is Rafael Arizaga, J 
ECACTOR-2, a leader of the Conservative Party there whose son, Carlos 
Arizaga, J ECACTOR- 3, is a Provincial Councillor and will be active in the 
Front. Formation of the Front has just been announced. 

Bacon has solved his problem by changing the name of his nonexistent 
organization to 'Ecuadorean Anti-Communist Action' instead of 'Front'. 



Quito 19 March 1961 



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The lines are drawing tighter, which is just what we want. The leftists have 
conducted a signature campaign of their own to support Velasco over maintaining 
relations with Cuba. Two days ago they published a declaration accusing the 
Defense Front of aiding Peru by calling for a break in relations with Cuba. The 
announcement was followed by three pages of signatures including Araujo and 
other leftist political, educational and cultural figures. 

Velasco himself, in a speech yesterday commemorating the deaths of his 
supporters which occurred a year ago, when he arrived in Quito to begin 
campaigning, insisted that Ecuador will never break with Cuba while he is 
President. He also emphasized that Ecuador is not communist, but he alluded to a 
subversive plot against him — a reference no doubt to recent rumours of rightist 
plotting in the military. Araujo was a speaker at the same rally. If this keeps up 
we will isolate Velasco on the Cuban issue so that his main support will be from 
the extreme left. 

On our side Gil Saudade, the Deputy Chief of Station, has had Juan Yepez 
del Pozo, Jr, National Coordinator of the Popular Revolutionary Liberal Party, 
issue a manifesto on his return from the Mexico City Peace Conference. The 
manifesto, which is just being put out today, condemns the Conservative and 
Social Christians for their current campaign against communism and Cuba while 
also criticizing strongly the Liberal Party and the communists. In his appeal to 
the Velasquista masses of poor people, Yepez calls for an integral revolution 
favouring the poor, but insists that it be effected within the law. The manifesto 
also denounces de facto regimes and totalitarianisms from both left and right. If 
this party can really get moving we will bring under control much of Velasco's 
leftist support, gradually bending it against the Cuban solution. Gil is now going 
to have Yepez establish an organization in Guayaquil. 

Quito 27 March 1961 

Velasco is showing signs of erratic behaviour, partly at least as a result of our 
propaganda. On 23 March he had the former Army commander under Ponce 
arrested for subversion, but two days later he was released by the Quito Mayor at 
the habeas corpus hearing. The government looked so ridiculous that Velasco 
had to fire his Minister of Government, who today resigned 'for reasons of 
health'. In announcing the appointment of his new minister, Velasco criticized 



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what he called the tendentious notices appearing almost daily in the press. With 
his habitual reference to his 400,000 votes he accused the propagandists of trying 
to provoke disorder. Velasco's physician, Dr. Ovalle, J is examining Velasco 
almost every week and he told me Velasco is feeling considerable strain over loss 
of popular support, which he attributes to the rightist campaign against Cuba and 
communism. 

Atahualpa Basantes, my PCE penetration agent who went to Cuba after the 
Mexico City Peace Conference, is back. He returned via Mexico City where he 
was debriefed by an officer from the Miami station. In his first report, which I 
just got from Dr. Ovalle, Basantes strongly insinuates he knows he's working for 
the Agency, undoubtedly because of his meetings with officers in Mexico City. 
Noland wants to continue the Velasquista pretext for the time being, however, so 
I won't be meeting him personally yet. The agent can't stop praising the Cuban 
revolution — I'm not sure what to do about this. 

Quito 2 April 1961 

Pleasant surprises for the station this week. Yesterday the University Sports 
League professional soccer team elected new officers and Noland was named as 
a Director. Manuel Naranjo, J the Socialist Party Deputy whom Noland met and 
recruited thanks to the Sports League, was elected President of the club. This is a 
matter of some prestige for Noland, an American Embassy official, to become an 
officer of Quito's top soccer club. Partly, it reflects his ability to move in the right 
circles and partly, no doubt, it is because he brought in uniforms and equipment 
for the team via the diplomatic pouch and contributed generously from his 
representation allowance. More important, the Socialist Party has been holding 
its annual convention, the first since the party split last year into the moderate 
wing and the extreme-left Revolutionary Socialist Party. Naranjo was elected 
Secretary-General today which means we will have still more influence in 
keeping the party moderately oriented. Naranjo and his colleagues call 
themselves Marxists but they reject the concepts of class struggle and 
dictatorship of the proletariat. It's important that we have some influence in a 
group that will attract people of social-democratic persuasion. 

Propaganda remains intense. The Catholic University Youth Organization has 
just held a convention which we helped to finance through Davila. The 
convention received considerable publicity, including a visit by a convention 



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delegation to the Cardinal, and a closing declaration against communism and 
Cuba was issued. 

Quito 4 April 1961 

Velasco continues to struggle against the rightist campaign against 
communism and Cuba. He again lashed out against the National Defense Front, J 
accusing the rightist political parties of using the Front to turn people against his 
government for economic as well as political reasons. He was answered later by 
the Deputy Director of the Conservative Party, who is also on the Executive 
Committee of the Defense Front, with accusations that Velasco is letting himself 
be carried away emotionally in his attacks on the Front. He also belittled 
Velasco's accusations that the Front is being manipulated like an opposition 
political party. 

Velasco's nervousness is evident in a new purge in the Army leadership, and 
in the resignation today of his Minister of Defense. The new minister is from a 
clique of Guayaquil Velasquistas, and his appointment will intensify charges that 
the President is being manipulated by the coastal Velasquista oligarchy. 

Quito 15 April 1961 

The invasion against Cuba has started with the bombing of Cuban airfields 
by 'defectors'. A leftist rally was held against the bombing in Independence Plaza 
with Araujo as main speaker, but no attack has yet been made on the Embassy. 
Noland has arranged with Colonel Lugo J and also with Captain Vargas J to be 
sure we get good protection during the next few days. The invasion will give 
URJE and the others all the excuse they need for another round of window- 
breaking. 



Quito 18 April 1961 



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The invasion really got going today but reports are conflicting and 
headquarters hasn't said anything yet. There have been anti- US riots all day in 
Quito and Guayaquil and the Army was called out to protect the Embassy, 
USOM and the bi-national cultural centre. Araujo is leading the mobs here in 
Quito. 

Davila tried to get a demonstration going in support of the invasion but they 
were outnumbered this time and had to be protected by police. Sentiment in 
general is running against the invasion even though many of those against it 
understand perfectly what would happen here if there was a communist 
revolution. They just hate US intervention more than they hate communism. 

The main Jesuit church in downtown Quito, a relic of colonial architecture, 
was stoned tonight during the URJE riot, and later tonight a bomb exploded in 
our Embassy garden. Things could be much worse however. 

Quito 19 April 1961 

Things are indeed much worse. This morning we received a propaganda 
guidance cable — it was sent to all WH stations — with instructions on how to treat 
the Bay of Pigs invasion. The cable said we should describe the invasion as a 
mission to re-supply insurgents in the Escambray mountains, not to take and hold 
any territory. As such the mission has been a success. Noland says this means the 
whole thing has failed and that heads are going to roll in headquarters. I've never 
seen him so glum. 

The Defense Front got together a sizeable demonstration of support for the 
invasion, which included speeches against Castro and communism. There was 
also a march through downtown Quito with the burning of a Russian flag and 
chants against Fidel, URJE and the stoning of the Jesuit church. 

I don't know what to think about the invasion. It's like losing a game you 
never even considered losing. I'm also worried about the AMBLOOD agents in 
Cuba. Press reports indicate that thousands have been arrested, many simply on 
suspicion of not supporting Castro. We have exchanged only five or six letters 
with secret writing, and they weren't very revealing. Toroella J has large sums of 
money, weapons and a yacht but apparently he communicates with Miami by 
radio as well as by the SW via Quito. I wonder if he is all right. 

Quito 24 April 1961 



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Mostly through the efforts of Davila the anti-communist reaction to the Bay 
of Pigs failure has driven the leftists off the streets. There was another pro-Castro 
demonstration three days ago but then the government banned all outdoor 
demonstrations for a week in order to let tempers cool. On the 2 1 st the formation 
of the Ecuadorean Brigade for the struggle against Castro was announced with a 
call for inscriptions and the claim that among those already signed up are military 
officers, students, workers, nurses, priests and white-collar workers. The same 
day an indoor rally supporting the invasion was held at the Catholic University. 

By coincidence the traditional Novena to the Sorrowful Mother going on 
right now is serving as a pretext to evade the ban on outdoor demonstrations. The 
sermons have focused on the imminent danger of communism, which is 
penetrating the country by passing itself off as Velasquismo. This can't please the 
President because this is one of the most heavily attended religious occasions, 
and is held at the Jesuit church that was attacked during the URJE demonstration 
against the invasion. Yesterday the novena service ended with a street procession 
that included thousands of people who turned it into a political rally against 
communism and URJE. Today a one-and-a-half-page notice was published in the 
newspaper condemning the attack against the Jesuit church. Araujo and URJE 
have denied the attack and the chances are high that the Conservative Party Youth 
or a Social Christian squad actually did it. 

Through all the commotion Gil Saudade has been working on an 
international organization. Last month the Secretary-General and the 
Administrative Secretary of the International Commission of Jurists J (ICJ) 
arrived in Quito in order to lay the groundwork for an Ecuadorean affiliate of the 
iCJ. Saudade managed to arrange for them to meet Juan Yepez del Pozo, Sr., the 
sociologist and leader of the Bolivarian Society who is chief advisor to the 
Popular Revolutionary Liberal Party. J The visit by the ICJ officials was part of a 
tour of Latin America to form affiliates where they don't already exist and to 
generate publicity for the ICJ'S work. 

*** 

Today the Ecuadorean affiliate of the ICJ was formally established, and 
Velasco was named Honorary President. The Rector of Central University, a 
Liberal-leaning independent, is President of the provisional Executive Board, 
which also includes the President of the Ecuadorean Supreme Court. Other 



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distinguished lawyers and legal associations are also taking part, including Carlos 
Vallejo Baez, J who with Yepez runs the learned magazine Ensayos to which 
Saudade gives financial assistance. Vallejo is also active in the PLPR, and Yepez 
was named Secretary-General of the ICJ affiliate. 

Gil is also working with the Inter-American Federation of Working 
Newspapermen % (IFWN), which was founded in Lima last year with the 
American Newspaper Guild J as cover. This organization is more like a trade 
union, as opposed to the Inter- American Press Society which is mostly 
composed of publishers. The IFWN serves to promote freedom of the press and 
as a mechanism for anti- communist propaganda; Its annual conference has just 
taken place in Quito, with statements against Cuba and the rightist dictatorships 
in the hemisphere. They also called for economic, social and political reforms. 
US journalists in attendance were used to spot and assess possible new media 
agents for different stations, while Saudade worked through the host 
organization, the Ecuadorean National Union of Journalists. % 

Quito 30 April 1961 

USOM has made its contribution towards countering the Bay of Pigs 
humiliation. They delivered a check for half a million dollars to our Minister of 
Labor and Social Welfare, Baquero de la Calle, } for colonization and integration 
of the campesino. Present at the well-publicized ceremony was Jorge Acosta, J 
who is head of the National Colonization Institute. Acosta has a strange 
relationship with the station. Most of us know him fairly well and he's closer than 
being just a 'contact'. Since we don't pay him he's not really a controlled agent, 
but he tells us as much as he can. The problem he has is that Velasco seems bent 
on losing all his support except the extreme left rather than break with Cuba. Not 
even Acosta can overcome that stubbornness. 

The Inter-American Conference is definitely off. Velasco publicly accepted a 
proposal made jointly by the Presidents of Colombia, Venezuela and Panama that 
it be postponed indefinitely We weren't surprised because now security would 
really be a problem. The rum ours have never ended that one country or another 
was proposing postponement because of security hazards, and recent discoveries 
here of contraband arms shipments from the US haven't helped to allay the fears. 

The day before Velasco announced the postponement he called for national 
unity and the easing of partisan political passions. But the same day the Quito 



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Chamber of Commerce denounced the failure of the government to publish the 
weekly statistical bulletin of the Central Bank. It hasn't come out for five 
consecutive weeks and the Chamber insists the government is making a 
deliberate effort to hide the worsening economic situation. The government is 
indeed considering a number of possible emergency economic decrees but has 
announced ahead of time that none of them involve new taxes. 

Quito 5 May 1961 

Pressure on Velasco from the National Defense Front and from the Cardinal 
has been helped by Velasco himself. On 30 April the Cardinal was expelled from 
the prestigious National Defense Board which is composed of eminent citizens 
and is responsible for advising on how secret defence funds are to be spent. Since 
the announcement of Velasco's action many Catholic groups have made well- 
publicized visits of solidarity to the Cardinal, including one today from the 
Defense Front. The visits have usually included speeches on the inhumanities of 
communism and the imminent danger of a communist takeover in Ecuador. 
Velasco's action in expelling the Cardinal is clearly retaliation for the Cardinal's 
criticism of the government on the communist issue, and sympathy for the 
Cardinal especially among the poor and illiterate can only further erode Velasco's 
power base. 

Quito 7 May 1961 

We have just had a remarkable breakthrough. One of our most valuable PCE 
penetration agents, Luis Vargas, } recently reported on what he thought was the 
beginning of serious guerrilla operations here. Vargas was not in the group 
currently being trained but his close and frequent association with the leaders of 
the group gave significant intelligence. Rafael Echeverria Flores, the number one 
PCE leader in the sierra, and Jorge Ribadeneira Altamirano, also a PCE leader in 
Quito and a principal leader of URJE, were the leaders, and the training was 
being conducted by a foreign specialist whose nationality was unknown to the 
agent. 

Vargas the agent got the word in time to the station and Noland advised 
Captain Jose Vargas, the Chief of the Police Intelligence. This morning 
Lieutenant Sandoval J laid a trap and during the course of the morning twenty 



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members of URJE were arrested on the mountain that rises above Quito. 
Ribadeneira and Echeverria are among those arrested. The foreigner conducting 
the training is a Bolivian and we're getting traces on him from the La Paz station 
for police intelligence. Too bad he isn't Cuban, but the propaganda dividend is 
going to be considerable anyway. 

Quito 9 May 1961 

The guerrilla arrests are headlines this morning! Yesterday the Sub-Secretary 
of Government gave a press conference in which he distributed the police report 
written by the intelligence unit. At Noland's suggestion the police report 
described those arrested as only one small group among many other groups that 
have been receiving guerrilla training for some time at secret sites around the 
country. The press stories very effectively sensationalize the police report, which 
described the training as including explosives, guerrilla warfare, street fighting 
and terrorism. 

The foreigner is Juan Alberto Enriquez Roncal, a thirty-two-year-old 
Bolivian who came to Ecuador last month and had been training URJE members 
in Guayaquil before coming to Quito. He has admitted everything to the police 
including giving training sessions in Ribadeneira's law office. 

Velasco issued a statement today that he will severely repress any terrorists, 
but he has released all those arrested except Ribadeneira, Echeverria and 
Enriquez. In Guayaquil the leader of the previous trainees was arrested, but the 
release of the others is sure to provoke a negative public reaction, since last night 
a power plant in Guayaquil was bombed. 

Quito 13 May 1961 

Basantes, another PCE penetration agent and a retired Army major, reported 
that the PCE leadership in Guayaquil (Pedro Saad and company) is furious with 
Ribadeneira and Echeverria. They think Enriquez may be a CIA agent 
provocateur and that Echeverria and Ribadeneira fell into the trap. 

However, the guerrilla trainer admitted today that he is really an Argentine, 
aged thirty-six, named Claudio Adiego Francia. He told police intelligence that 
he had no money and was giving the guerrilla training so that he could continue 
travelling. Cuba is his destination but he said he has no invitation. He described 



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his long background in Argentine revolutionary activities, and then changed his 
story, now claiming he wasn't really giving training but only recounting to the 
URJE and PCE people his experiences in Argentina. 

This new twist is keeping the story in the newspapers and the case has been a 
help to our signature campaign for mercy for the Bay of Pigs prisoners. The 
campaign has been promoted by stations all over Latin America. In Quito the 
ECACTOR political-action agents have circulated the petition: today the 
telegram to Castro pleading mercy was published, followed by two pages of the 
more than 7000 signatures obtained. 

Student operations of the Guayaquil base have had a series of successes in 
recent months culminating two days ago with the disaffiliation of the FEUE from 
the Prague-based International Union of Students. 

This final victory began with the change in FEUE election procedures at 
Portoviejo last December, followed by election victories at the University of 
Cuenca in March and the Central University in Quito last month. In both 
instances the forces led by Alberto Alarcon defeated the candidates for FEUE 
offices put up by the Velasquistas and the extreme left. Our only defeat was at the 
University of Loja where the leftist candidate won. The picture is confused in 
Guayaquil because the FEUE has split between a Velasquista group that supports 
the Mayor and an extreme leftist group led by members of URJE. 

The vote today by the National FEUE Council in Quito will have to be 
ratified by the FEUE Congress later this year, but in the meantime relations 
between the FEUE and the Agency-controlled COSEC J in Leyden can be 
cemented. 

Quito 15 May 1961 

Ambato is the site of the most recent action. Yesterday in Ambato a Cuban 
photographic exhibit was inaugurated under sponsorship of the Ambato chapter 
of the Cuban Friendship Society. The ceremony was held in the Municipal Palace 
approval for which had been granted by the Ambato Mayor, a Revolutionary 
Socialist. The Mayor in his speech went so far as to call the Quito Cardinal a 
traitor, and the Cuban Ambassador gave a fiery speech against the US. 

Following the speeches an unexplained electrical failure prevented the 
showing of a film on Cuba and later a group of about twenty men invaded the 
Palace and destroyed most of the photographs and mountings. The police arrived 



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after the damage was done and the group left quickly, firing their revolvers into 
the air as they went. No arrests were made. 

Jorge Gortaire, J a retired Army colonel and leader of the Social Christian 
Movement in Ambato, was the organizer of the raid. Noland has been financing 
him from the ECACTOR project since last year to help build up a militant action 
organization and to promote a political campaign against the Mayor. Careful 
planning of the attack, especially through coordination with the police, was the 
reason it was so successful. Even so, the Mayor is getting more photographs 
down from Quito so that the exhibit can stay open. 

Quito 22 May 1961 

In Guayaquil the police recently arrested, at base request, three Chinese 
communists who arrived some days ago. They had been given courtesy visas by 
the Ecuadorean Ambassador in Havana and supposedly were here representing 
the Chinese Youth Federation. The base tried to arrange for them to be held for a 
long period, so that recruitment possibilities could be studied, but the order for 
their expulsion had already been issued. 

The police are carrying out the base request to sensationalize the case. The 
official report charges them with propaganda and subversion, claiming they had a 
powerful radio transmitter in their hotel room, with which they were in 
communication with Cuba and other communist countries in the evenings after 
ten o'clock. Preposterous charges, but there's so much fear and tension in the 
atmosphere right now that most people will believe it. 

The same day the Chinese communists were deported, a sensational plot to 
assassinate Velasco surfaced. The attempted assassination was reported by a 
Guayaquil radio station (falsely, for which the radio station was ordered to be 
closed) but on checking sources the trail led straight to the Cuban Consul. The 
Consul refused to testify in the investigation and has been expelled by the 
Ecuadorean' government. His departure has given us another propaganda peg for 
demonstrating Cuban intervention in Ecuador, even though he was simply a 
victim of provocation because he had reported the plot to security authorities in 
Guayaquil. It appears to us that the provocation was rigged by Velasco or his 
lieutenants in order to appease the Defense Front and other anti-communists. 

Here in Quito the National Defense Front has been more strident than ever in 
its propaganda created through public meetings, press conferences and published 



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statements. The Front is criticizing Velasco for his policy towards Cuba, 
demanding the firing of the Ecuadorean Ambassador to Cuba over the 
presentation of a portrait of Castro 'in the name of the Ecuadorean people', 
demanding that Velasco suppress communism, and demanding the expulsion of 
the Cuban Ambassador for his anti- US speech in Ambato. The Front continues to 
insist that Velasco define himself on communism even though he recently 
insisted in a speech that while he is President Ecuador will not become 
communist. The Conservative Party has also joined the campaign for expulsion 
of the Cuban Ambassador. 

In Cuenca, Carlos Arizaga Vega, J a leader of the ECACTOR operation 
there, circulated a petition and sent it to Velasco demanding the firing of the 
Ambassador to Cuba over the portrait presentation. Velasco, for his part, has 
dismissed the military commander of the Cuenca zone who is a well-known anti- 
communist — provoking renewed criticism there. 

In Ambato, the Mayor was severely denounced by Municipal Councillors for 
his remarks about the Cardinal and for having granted use of the Municipal 
Palace for the Cuban photographic exhibit. But at the closing of the exhibit 
yesterday the Mayor, Araujo, CTE and PCE speakers all repeated the anti-clerical 
themes. They began a march in the street afterwards, but were met by a Catholic 
counter-manifestation organized by Gortaire and armed with rocks, clubs and 
firearms. A pitched battle followed and, although shots were fired, no one seems 
to have been wounded. The much larger counter-demonstration easily 
overwhelmed the leftists and at one point Araujo was in danger of being lynched. 
If the police hadn't intervened something serious might have happened. 

Somehow amidst all these crises labour operations continue to move, 
although not without some serious problems. CROCLE, our coastal organization, 
has served consistently for anti-Cuban and anti- communist propaganda, but our 
agents in it are not as effective in trade-union activities as we would like. They 
are constantly feuding among themselves and failing to get out and organize. 
However, they won't be terminated until Gil Saudade is able to move some of his 
agents from the PLPR J into the leadership of the national free labour 
confederation now in its embryonic stage. Miranda, J our Coastal Labour 
Senator, is also ineffective and he is feuding with the CROCLE agents. Finally, 
Jose Baquero, our Minister of Labor, is determined to promote the small and 
ineffective Catholic labour group, CEDOC, instead of our budding, secular 
organizations. His effectiveness is also limited because as Minister he is 



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responsible for the public-health service, the social-security system, protection of 
minors, the fire departments and cooperatives as well as labour matters. 

On two recent occasions the International Organizations Division in 
headquarters has sent in agents to help us. In March William Sinclair, J the Inter- 
American Representative of the Public Service International J (PSI), and William 
H. McCabe, J also a PSI representative, came to assist in planning for a congress 
of municipal employees that a few weeks later launched a new National 
Federation of Municipal Employees. Also, an exploratory visit was made by an 
international representative of the International Federation of Plantation, 
Agricultural and Allied Workers J (IFPAAW) for possible assistance in 
organizing Ecuadorean rural coastal workers. 

Quito 28 May 1961 

The Cubans have made a timely manoeuvre. Yesterday Carlos Olivares, the 
Cuban Sub-Secretary of Foreign Relations and their most important trouble- 
shooter, arrived in Guayaquil. He is on a 'goodwill' tour trying to bolster Cuban 
relations with South American countries, capitalizing, of course, on the Bay of 
Pigs invasion. Today he saw Velasco, but we haven't been able to get a report on 
their private meeting. 

Olivares's visit coincides with new reports on the considerable publicity 
given in Cuba to recent speeches by the Ecuadorean Ambassador at Cuban 
universities. According to Cuban press releases the Ambassador has attacked the 
US, alleging that Ecuador, like Cuba, has been the victim of the 'arbitrary, unjust 
and rapacious American imperialism'. The reports have provoked new outrage 
against Velasco on his Cuban policy. 

Today Velasco gave another speech and made no attempt to hide the damage 
our campaign is doing. He condemned persons unnamed for trying to divide the 
country between communists and anti-communists, and he repeated that while he 
is President, Ecuador will never become communist. 

Our campaign through Salgado, Davila, Perez, Arizaga, Gortaire and other 
agents goes on. John Bacon is also continuing to publish the 'alert' notices every 
two or three days, and other propaganda themes include concern over the Bay of 
Pigs prisoners and the recent guerrilla arrests in Quito. 

In Ambato, Gortaire has managed to launch an Anti-Communist Front that 
includes Liberals as well as the Conservatives, the fascist ARNE and others. This 



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is the first instance of significant Liberal Party participation in anti- communist 
fronts and clearly reflects the prestige and organizing ability of Gortaire. 

Quito 29 May 1961 

If our propaganda and political-action campaign doesn't force Velasco to take 
the right action, the worsening economic situation will. Today the President of 
the Monetary Board, appointed by Velasco himself, resigned in protest against 
the damage to the economy that uncertainty over Cuba and communism is 
causing. 

Since the return in early March to policies of monetary stability, inflation has 
failed to slow down while Velasco has created a considerable number of new 
indirect taxes that are very unpopular. While Velasco and his lieutenants continue 
their theme of 'forty years of Velasquismo' most of the people have been 
struggling against their declining purchasing power. One indication of how bad 
the situation is getting is the decline in free-market value of the sucre: from about 
eighteen per dollar six months ago to over twenty-two right now. 

The President of the Monetary Board, in resigning, attributed the worsening 
economic situation to lack of confidence based on Velasco's tolerance towards 
communism internally and his ambiguity towards Cuba. He insisted that Velasco 
must take action instead of making philosophical statements, and he pinpointed 
the following specific problems: the activities of the Ecuadorean Ambassador to 
Cuba; the agitation emanating from the Cuban Embassy in Quito and the Cuban 
Consulate in Guayaquil; the Cuban Ambassador's speech in Ambato; and the lack 
of clear definition by Velasco on communism. 

Velasco is really embarrassed by this resignation which Noland says is bound 
to have some effect. The resignation statement couldn't have been better if we 
had written it ourselves. Exactly what we want. 

Quito 30 May 1961 

Finally Velasco is taking action. Several of the Velasquista penetration agents 
have reported that Velasco asked Olivares to withdraw the Cuban Ambassador. 
There is not going to be a persona non grata note — simply a quiet exit. This is a 



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significant start and it shows Velasco is facing reality: he just can't continue 
ignoring the pressure of the Social Christians, Conservatives, Catholic Church 
and all the other anti-communists — and us. As soon as we learn of the Cuban 
Ambassador's travel plans we'll pass word for a hostile farewell committee. 

On the negative side a judge today released Echeverria and Ribadeneira for 
lack of evidence. He's the best friend of the extreme left in the court system and 
was the last hope for those two. Earlier the habeas corpus proceeding had failed 
them and the CTE campaign for their release hasn't been very effective. The 
judge ordered documents from the police on the original sources of the police 
information, including names of their informants. As the station is the only 
source, this effectively killed the legal case. 

Quito 3 June 1961 

Velasco made a very important speech tonight. At a political rally he tried to 
make the political definition that the Defense Front and the rightist political 
parties have been demanding. He announced a doctrine of liberalism which for 
him means cooperation rather than conflict between classes. He denounced 
communism, praised representative democracy, and described his own course as 
between the extremes of left and right. He also said that communism should be 
attacked not by police repression but through the elimination of misery, hunger, 
sickness and ignorance. He showed the effect of our campaign, charging the 
anticommunists with trying to take away the bases of his support by dividing the 
400,000 Ecuadoreans who voted for him on the pretext of anti-communism. 

This speech, coming on the heels of the Cuban Ambassador's expulsion, will 
tend to soften the campaign. Our goal is a complete break in relations with Cuba, 
not just an expulsion. Economics will probably help us. The sucre is now down 
to twenty-three per dollar from eighteen six months ago, and a controversy is 
raging over inflation, especially the prices of medicines which are among the 
highest in Latin America. 

Quito 7 June 1961 

Velasco's 'anti-communist' speech has been very well received and even the 
Conservative Party has issued a statement of guarded approval. What most 
people are watching, however, are his actions and we have some distance to 



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cover before relaxing. The day after Velasco's speech, the Minister of Defense 
made it clear that Velasco now considers his position defined as anti- communist 
— a clear attempt to stop erosion of support from the station-backed anti- 
communist campaign. 

The Liberal Party has rather suddenly taken a strong stance against the 
President, partly no doubt because of a recent attack by a Velasquista mob on 
their paper El Comercio. At the annual celebration of the Party's founding it was 
said that the past thirty years of Velasquismo have pulled down the county in a 
cataleptic state and, of course, that only the Liberal Party can save it. The 
Liberal's complaints are mostly founded on the worsening economic situation: 
the sucre has now fallen to twenty-five. 

Some relief has become available, however, largely because of Velasco's anti- 
communist actions of the past two or three weeks. Today in Washington the 
International Monetary Fund announced a ten-million- dollar stand-by loan for a 
stabilization programme in Ecuador. In the announcement the IMF also said that 
the Central Bank, which requested the loan, is going to adopt a policy of credit 
restriction and other measures to end the flight of capital, recognizing also that 
measures have already been taken to slow the fall in foreign-exchange reserves. 

The IMF announcement was embarrassing to the government here, which 
didn't want publicity. The Minister of Economy even declined to comment on the 
announcement, saying that questions should be directed to the IMF in 
Washington. 

Quito 12 June 1961 

This past week, since Velasco made his 'anti-communist' speech, has been the 
first fairly calm period since I arrived. In the hectic pace as we've passed from 
crisis to crisis I almost haven't noticed how far my Spanish has come along. 
Noland is especially pleased with my progress on the language and also with the 
way I have been developing friends among the Ecuadoreans, impossible, of 
course, without the language. Mostly I've been spending time meeting people at 
the golf-club while learning to play. 

Janet has a mental block on the language and it's growing as a source of 
friction between us. Among other things this limits her friends to those who 
speak English and it also hinders her running servants and shopping. Politics, 
unfortunately, are not interesting to her either. But these are small complaints and 



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common, I'm told, at overseas posts. And they certainly pale before the big news: 
in October our first child is due, something we didn't exactly plan but we were 
both happily surprised. 

The work routine at the station is arduous — nights, week-ends, whenever 
things are happening. After reading the newspapers each morning we begin 
writing and distributing papers: pouched dispatches on operations, intelligence 
reports, cables for urgent matters. Noland insists that each day we all read the 
cable chronological file so that we're up to date on all the incoming and outgoing 
traffic. The pouched material, both out and in, is circulated so that each officer 
will know exactly what the others are doing, their successes and their problems. 
Each of us also looks over the flight passenger lists each day, and Noland insists 
that we also read the State Department cables and pouched material handled by 
the Embassy staff. With all this reading, I'm pressed to get out for agent 
meetings, although I am only meeting directly about five. The worst is writing 
intelligence reports because the special usage and format must be followed. 

The propaganda and political-action campaign against Araujo, Cuba and 
communism in general has clearly been the major station programme since I 
arrived six months ago. The ECACTOR project has accounted for much of this 
activity. It costs about 50,000 dollars a year and in a place like Quito a thousand 
dollars a week buys a lot. The feelings I have is that we aren't running the 
country but we are certainly helping to shape events in the direction and form we 
want. The other main station activity, the PCE penetration programme, has 
consistently provided good information. There's no question that Echeverria and 
his group here in the sierra are doing all they can to prepare for armed guerrilla 
operations. We have to keep the pressure on Velasco to break with Cuba and 
clamp down on the extreme left. 



Quito 15 June 1961 

Velasco apparently thinks his 'anti-communist' definition had ended the 
campaign. In a speech the other day he repeated his old theme that Ecuador will 



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never become communist under him, but he insisted that he will not break 
relations with Cuba without a diplomatic cause. 

On the other hand Jorge Ribadeneira, the URJE leader arrested on the 
guerrilla training exercise, has been sent to an isolated Amazon jungle outpost to 
do his military service. His absence will be a severe blow to the URJE leadership 
in Quito and also to the PCE. 

Through Gustavo Salgado we are trying to relate the guerrilla arrests last 
month to exile reports on guerrilla training in Cuba. The JMWAVE station in 
Miami recently released an article on guerrilla training in Havana of groups of 
ten to fifteen who have been arriving from various Latin American countries. The 
article was passed to Salgado who added the URJE training episode of last month 
and arranged for publication on two consecutive days. Somehow we have to 
retain the sense of urgency in the propaganda campaign on communism and 
Cuba. 

Today the Foreign Ministry announced that the Ecuadorean Ambassador to 
Cuba is retiring from the post 'at the convenience of the Foreign Service'. Velasco 
is certainly making an attempt to placate the rightists, but the fact is that he has 
no other choice now. 

Quito 16 June 1961 

It was recently announced that Vice-President Arosemena will leave on 1 8 
June for a trip to the Soviet Union, Czechoslovakia and Poland. We've known 
about this trip for some time. The invitation is from the Supreme Soviet and the 
group will include several legislators as well as Arosemena. Formally this is a 
'private' trip with no diplomatic or commercial purposes, but Arosemena is well 
known for his leftist ideas — he is also an alcoholic — and some mischief will 
come from the trip for sure. 

Velasco is against the trip because Adlai Stevenson arrives the day 
Arosemena leaves, and Velasco is desperate for economic assistance. Stevenson 
is touring Latin America promoting the Alliance for Progress and trying to pick 
up the pieces from the Bay of Pigs fiasco, and Velasco is going to give him a list 
of requirements. He doesn't want Arosemena's trip to jeopardize his requests for 
aid to Stevenson, especially after expelling the Cuban Ambassador and firing his 
own anti-US Ambassador to Cuba to prepare a favourable atmosphere. So 
Arosemena's trip has sparked a sharp public exchange between him and Velasco. 



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The Foreign Minister announced today that the Cabinet unanimously resolved 
that Arosemena's trip at this time is 'inconvenient' with emphasis that the trip is 
on Arosemena's own account with no official standing. Arosemena for his part 
defended the trip by denouncing unnamed Velasquista government leaders as 
money-crazed. Dr. Ovalle reports that Velasco is furious. 

Quito 20 June 1961 

Arosemena left as planned and today Ambassador Stevenson also leaves. 
Velasco presented Ecuador's development needs in a seventeen-page 
memorandum that lists initial requirements totalling about 200 million dollars. 
Stevenson also met with moderate leaders of the Quito FEUE chapter and with 
leaders of the free trade -union movement. I had a short chat with him in the 
Embassy yesterday. In a few days an Ecuadorean delegation headed by the 
Minister of Development will leave for Washington to press for new loans. 
Arosemena's trip doesn't seem to have damaged Velasco's requests to Stevenson, 
but the split between the two won't be mended easily. 

Today Velasco changed his Minister of Government again. He named a 
former Defense Minister under Ponce in what is an obvious move to make 
adequate security arrangements before the Congress reconvenes in August. 

Quito 29 June 1961 

Noland has decided to move ahead on coverage of the Cubans here by 
putting a telephone tap on the Embassy. He asked me to take charge of this new 
operation, and a few days ago he introduced me to Rafael Bucheli, J the engineer 
in charge of all the Quito telephone exchanges. Bucheli is an old friend of Noland 
because his brother (cryptonym ECSAW) was our principal political-action agent 
in the Ponce government until he was killed in an automobile accident. Bucheli is 
going to make connections in the exchange where his office is located and which 
serves both his home and the Cuban Embassy. Noland also introduced me to 
Alfonso Rodriguez, J the engineer in charge of all the telephone lines system 
outside the exchanges. Noland met Rodriguez through his work on the University 
Sports League soccer team where Rodriguez is also active. He recruited 
Rodriguez who suggested that Bucheli might also help, not knowing yet that 
Bucheli had also agreed. 



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The two engineers, Noland and I began planning the operation but Noland is 
going to let me handle it alone. The first thing I must do is get headquarters 
approval for the operation and some equipment from the Panama station where 
the TSD has just set up a regional support base. The Panama station is located at 
Fort Amador in the Canal Zone where they have various support staffs who are 
able to save several days travel time to most of the WH stations. Then Rodriguez 
will run a special line to Bucheli's house where we'll set up the LP. I'll ask 
Francine Jacome, who was writing the cover letters for the AMBLOOD SW 
messages, to do the transcribing. 

Quito 7 July 1961 

Good news from Velasco for a change. Today he appointed Jorge Acosta 
Velasco J as Minister of the Treasury. Until now Acosta has been Director of the 
Colonization Institute and the Vice- President of the National Planning Board, 
somewhat removed from his uncle, the President. He has been keeping Noland 
informed on Velasco's obstinacy over breaking with Cuba, but now he'll be able 
to work on the problem from within the Cabinet. 

Ambassador Bernbaum is also trying to soften up Velasco on the Cuban 
problem. Thanks to his insistence a five million dollar development loan for 
housing has just been approved, and he also arranged an invitation for Velasco to 
visit Kennedy, which will be announced in a few days, probably to take place in 
October. 

Davila and the Conservatives continue to squeeze. Today the Party forbade 
any of its members to accept jobs in the Velasco administration. 

Quito 11 July 1961 

The Cardinal issued an anti-Cuban pastoral yesterday which may have 
overshot the mark. It's inflammatory, alarmist, almost hysterical in its warning 
against Cuba and communism. He urges all Ecuadorean Catholics to take action 
against communism but he doesn't say what action. The statement is so emotional 
it may be counter-productive, but Noland has faith that the Davila crowd, who at 
our instigation urged the Cardinal to produce it, know what they are about. 



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Today we distributed an unattributed fly-sheet through the ECJOB team. This 
severely attacked the Cardinal for these statements. The Catholic organizations 
are at once, as expected, beginning their protests. 

Quito 15 July 1961 

The political situation has taken a new turn that promises to obscure the 
Cuban and communist issues. Opposition to the government has suddenly united 
behind Vice-President Arosemena, thanks largely to Velasco himself. 

Three days ago Velasco appointed a new Minister of the Economy who is a 
paving contractor with large government contracts. He is also associated with the 
Guayaquil financial interests surrounding Velasco and his appointment 
immediately rekindled the criticisms that Velasco is dominated by the Guayaquil 
clique. Yesterday the government announced the unification of the exchange rate 
which will mean that importers of machinery, raw materials, medicines and other 
basic materials will have to pay about 20 per cent more in sucres for each dollar 
of foreign exchange purchased through the Central Bank for their imports. The 
unification measure is practically the same as an official devaluation of the sucre 
and will cause prices to rise immediately, because no compensatory measures 
such as tax adjustments or tariff exemptions were included. The economic sector 
most affected will be sierra agriculture but prices generally will rise throughout 
the country. 

The unification decree has come just as a series of new indirect taxes has 
been announced on carbonated beverages, beer, official paper, unearned income, 
highway travel and other articles. These taxes will also cause prices to rise or 
buying power to drop and they violate Velasco's own recent statements that taxes 
are already too high. 

In Washington the International Monetary Fund has issued a statement 
supporting the measure on unification, which is not surprising because everyone 
knows unification was a condition for the ten-million-dollar standby announced 
last month. In Ecuador, however, almost every significant political organization, 
and other groups such as the FEUE and the CTE have announced opposition to 
both unification and the new indirect taxes. 

Announcement of the new economic decrees couldn't have been made at a 
worse time for Velasco, because the other event yesterday was Arosemena's 
return from his trip to Moscow. His supporters, including leaders of the extreme 



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left, had been promoting a big reception for him for over a week. At the Quito 
airport several thousand turned out with Araujo as one of the leaders. Posters 
were prominent with slogans such as 'Cuba si, Yankees no', 'Down with 
Imperialism' and 'We Want Relations with Russia'. 

Velasco is going to have to struggle hard to keep his balance. Just possibly he 
will break with Cuba in order to gain rightist support, but we aren't taking bets. 

Quito 23 July 1961 

Arosemena has become undisputed leader of the opposition to Velasco. 
Although the Conservatives and Social Christians continue their opposition on 
the Cuban and communist issue, the new economic decrees have given the 
FEUE, CTE, URJE, the PCE and the Revolutionary Socialists the perfect pretext 
to line up behind Arosemena. Even the reactionary Radical Liberal Party and the 
moderate Socialist Party under our agent Manuel Naranjo have joined the 
extreme left in supporting Arosemena as the opposition leader. 

Velasco is rattled by Arosemena's sudden popularity. During the reception for 
him at Guayaquil the local tank units were placed on alert to create fear and 
(unsuccessfully) to cut down attendance. While trying to defend the economic 
measures on the grounds that the government needs more income for public 
works, Velasco has bitterly attacked Arosemena for dividing the Velasquista 
Movement. As Arosemena and some of his supporters are still calling themselves 
Velasquistas even though they have turned against Velasco, the President has told 
them to leave the Movement and form another group with a different name. 

Guayaquil student operations have just had a setback. Elections were held a 
week ago for FEUE officers at the University of Guayaquil — possibly the most 
important FEUE chapter because of the high level of militancy of the students 
there. Our forces, financed from the ECLOSE project and led by Alberto 
Alarcon, lost to the extreme left. A leader of URJE was elected FEUE President. 
The election came at a bad time just as the extreme left was making noisy 
support for Arosemena against Velasco on the economic issues. 



Quito 27 July 1961 



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Gil Saudade, our Deputy Chief of Station, decided to risk the future of his 
ECLURE party, the Popular Revolutionary Liberal Party (PLPR), on Velasco's 
longevity in the Presidency His hope is still to attract the Velasquista left away 
from Araujo even if this means open and direct support for Velasco. When the 
party's first national convention opened in Quito a couple of days ago, Velasco 
was named Honorary President. 

Preparations for the convention have been underway for several months and 
have included public statements on major issues. In late June, for example, the 
PLPR published a statement supporting Velasco on his Cuba policy (a conscious 
manoeuvre by Saudade) but strongly denouncing 'the twenty families that have 
been exploiting Ecuador since before Independence and that seek to conserve 
their privileges by keeping the country under the landlords and bosses'. The 
statement also affirmed that the real enemies of the Ecuadorean people are the 
Conservative Party, the Social Christian Movement, the Radical Liberal 'Party 
and the Socialist Party — all of whom represent the rich oligarchies who oppress 
the poor masses of the country. 

Two weeks later the PLPR published another statement sharply criticizing the 
most recent pastoral letters of the Cardinal, whom our agents accused of being 
just one more oligarch using the communist scare for his own purposes. Right 
now Gil has on the payroll the party's National Director, Juan Yepez del Pozo, Jr; 
the National Coordinator, Antonio Ulloa Coppiano; J the Legal Counsel, Carlos 
Vallejo Baez; J and the mastermind behind the operation, Juan Yepez del Pozo, 
Sr. who holds no office. 

Saudade is very pleased with the PLPR convention which ended last night 
with Velasco as the principal speaker. The final session got ample publicity and 
was overflowing with people. Although the party had to support Velasco on his 
Cuban policy for tactical purposes, Saudade was careful to have Juan Yepez, Jr, 
in his opening speech describe the PLPR as opposed to the extremes of left or 
right, adding that the party could never approve of the despotism of Soviet 
Marxism. 

Gil has also picked up two new agents from the convention, both of whom he 
plans to guide into the free labour movement to ensure station control beyond the 
CROCLE operation of the Guayaquil base. One of the new agents is Matias 
Ulloa Coppiano, J brother of Antonio Ulloa who is PLPR National Coordinator. 
Matias is a leader of a collective transportation cooperative. The other new agent 



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is Ricardo Vazquez Diaz, J a leader of the Guayaquil PLPR delegation, who was 
one of the secretaries of the convention. 

Quito 31 July 1961 

Velasco and the Cubans seem to be on the verge of establishing a mutual-aid 
society. Yesterday an interview with the new Ambassador was published wherein 
the Ambassador claims that Cuba was the first country to back Ecuador in its 
demand for revision of the Rio Protocol, comparing the forceful imposition of the 
Protocol to the imposition by the US of the Piatt Amendment and our retention of 
the Guantanamo naval base. Today the Foreign Ministry issued a statement 
emphasizing Ecuador's opposition to any form of collective or multilateral 
intervention in Cuba. 

The Defense Front forces, however, haven't relaxed. At a pro- Cuba rally 
three nights ago Araujo's speech was interrupted by an unexplained power 
failure. Police troops and cavalry outside the theatre prevented another riot with 
counter-demonstrators. Similarly, when the new Cuban Ambassador presented 
his credentials at the Presidential Palace, an anti-Castro group sent by the 
Defense Front clashed with an URJE group that had come to the Palace to cheer 
the Ambassador. A riot followed and was finally broken up by the police with 
tear-gas. 

The TSD support office in Panama sent tape-recorders, dial-recorders and 
actuators for setting up the telephone tap on the Cuban Embassy (cryptonym 
EC WHEAT). Last week the audio technician, Larry Martin, J was here to train 
Rafael Bucheli J to use the equipment, and Bucheli made the connections in the 
exchange aided by an assistant. Bucheli and the assistant are both active in the 
Quito model airplane club and I'm going to get a catalogue from headquarters so 
that they can select items that I can order through the pouch. Later we'll talk of 
salaries. 

Quito 4 August 1961 

Velasco's tactics of bullying the opposition have cost him another Minister of 
Government. In a recent open polemic between the Minister and the National 
Director of the Radical Liberal Party the Minister launched such severe personal 
insults that he was challenged to a duel by the Liberal leader. Yesterday the 



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Minister resigned so that he could accept the challenge, since duelling in Ecuador 
is illegal. The Liberal leader, who is from Guayaquil, flew up to Quito yesterday 
for final preparations, but he was met at the airport by several hundred rioting 
Velasquistas, most of whom were plain-clothes policemen and employees of the 
government monopolies and customs. The Liberal leader barely escaped lynching 
while several international flights were disrupted because of the tear-gas used by 
police and the general chaos. The duel was later called off, however, because the 
seconds somehow arranged for satisfactory excuses by the ex-Minister and 
honour was satisfied. 

During the riot at the Quito airport a touring Soviet goodwill delegation flew 
in unexpectedly. We've had reports from other WH stations on their tour but the 
exact date they would proceed to Quito was undecided, probably to avoid a 
hostile reception. Our National Defense Front agents will publish statements and 
demonstrate against the visit. They are staying at the Hotel Quito but we still 
have not received the bugged lamps back from our technical support base in 
Panama. 

Quito 31 August 1961 

Our propaganda and political-action campaign to keep the opposition to 
Velasco focused on Cuba and communism is being diverted because of the 
greater importance of last month's economic decrees on unification of the 
exchange rate and new taxes. Inflation has also become a major public issue. The 
government, however, is determined to retain the economic decrees in order to 
stimulate exports. Similarly, the new taxes are being justified as needed for the 
police, armed forces, education and public works. Nevertheless, the decrees have 
become the unifying issue for Velasco's opposition, and tomorrow the Chambers 
of Commerce of the entire country will call for repeal of the unification decree. 

The Congress, which reconvened three weeks ago, is the centre of opposition 
political debate, and already the Velasquista tactics of intimidation by hostile 
mobs in the galleries have been renewed. During one session, when the acting 
Minister of Government was called to answer questions about police repression 
in Guayaquil, nothing could be heard over the screaming of the galleries. Orange 
and banana peelings and showers of spittle fell on the opposition Deputy who 
was trying to question the Minister. Nevertheless, the Deputy spoke for several 
hours against repression in Guayaquil, but he was vilified continuously by the 



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galleries, finally being forced to seek shelter. Meanwhile, fights broke out on the 
Chamber floor between Deputies, ashtrays were hurled by opponents, and the 
Chamber's security forces refused to eject the rioters in the galleries. 

Arosemena, as President of the Congress, continues as the leader of the 
opposition to Velasco. Although loyal Velasquistas have been elected to offices in 
both houses, the exact party balance is unclear because of uncertainty over 
defections of Velasquistas to Arosemena — as in the case of Reinaldo Varea, } 
who was reelected Vice-President of the Senate and has declared for Arosemena. 
Two weeks ago a delegation from the CTE was invited by Arosemena to a joint 
session of Congress with Arosemena presiding. Members of the delegation asked 
the Congress to nullify the July decrees on unification and new taxes, adding that 
if the decrees are not cancelled the CTE will call a general strike. This time 
Arosemena had the Velasquista mob ejected when they started shouting. 

Quito 2 September 1961 

Saudade is certainly moving his Popular Revolutionary Liberal Party (PLPR) 
along — this time with help from the Bogota station. Since arriving in Quito 
Saudade has been corresponding with the Bogota station which supports a leftist 
wing of the Liberal Party called the Revolutionary Liberal Movement (MLR). 
Experience with the MLR in Colombia has been important for Saudade here 
because he hopes to achieve success with the PLPR comparable to the Bogota 
station's success with the MLR. 

Some weeks ago Saudade had Juan Yepez del Pozo, Jr. of the PLPR invite 
the leader of the MLR, Alfonso Lopez Michelson, J to visit Quito to exchange 
experiences and to promote PLPR organizational work. Saudade, of course, 
didn't reveal the CIA interest in the MLR but the Bogota station assured 
acceptance of the invitation. I wonder whether Lopez is witting and contact with 
him is direct or whether the Bogota station's access to him is through other MRL 
leaders. 

Lopez arrived yesterday and will see Velasco and Arosemena and make a 
number of speeches. He will also visit Guayaquil. Saudade is picking up the tab, 
and good publicity is already coming out. 

Quito 4 September 1961 



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Arosemena is cementing his political support from the CTE. Today the 
Senate under his prodding gave 50,000 sucres to the CTE for its national 
convention, scheduled for later this month in Ambato. The CTE responded with 
thanks from the Revolutionary Socialist sierra Labor Senator and invited 
Arosemena to address the convention's closing session; he accepted. 

The CTE'S campaign against the decrees on unification and taxes continues, 
along with promotion of a general strike, the date of which still hasn't been set. 

Our PCE penetration agents report joy in the party over Arosemena's 
cooperation with the CTE and the extreme left generally but leftist leaders are 
worried about his alcoholism and will be careful not to get burned by getting too 
closely associated with him. 

In a few days we are going to bug the Czech Legation. For months Noland 
has had Otto Kladensky eliciting information from the Czechs on possible 
permanent locations for the Legation, and they finally signed a contract on a 
large house now nearing completion. On checking the building records, Noland 
discovered that the engineer in charge of construction is a friend of his from the 
University Sports League. Noland also knows the owner of the house, but after 
discussions with the engineer he decided not to speak to the owner for fear he 
would oppose risking his contract. 

Equipment has arrived from headquarters for five or six installations, and the 
audio technicians are already here studying the building plans to determine how 
the rooms will be used. Their first priority is the code-room, followed by the 
Minister's office, and then studies and bedrooms. 

Since the house is in one of Quito's nicest new areas, we have plenty of 
support bases available for use during the installation. The plan is for the two 
audio technicians to enter the house at night with the engineer who luckily speaks 
English. I will be in an observation post overlooking the house which is a back 
bedroom of the home of an Embassy USIS officer. Noland and Captain Vargas, J 
Chief of Police Intelligence, and several of Vargas's strong-arm boys, will be in a 
support base in the apartment of Noland's administrative assistant who lives only 
two blocks from the target house. We will have walkie-talkie communications 
between the target house, my OP and the support base. If anything goes wrong, 
we will call on Vargas and his boys to step in and take over 'officially' while our 
audio technicians make a getaway. Vargas and his boys won't know why they're 
on standby unless they're needed. 



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Quito 20 September 1961 
Quito 

The first try for the audio operation against the Czech Legation failed. It was 
the technicians' fault and they were lucky not to have been caught. Bunglers! 
Everything went perfectly until about five o'clock in the morning when, as I was 
fighting to keep awake, I noticed the two technicians hurrying out of the house 
with their suitcases of equipment and running down the street to the getaway car. 
The engineer went running after them and they all drove away. I advised Noland 
by walkie-talkie and we went to the Embassy to rejoin the technicians. 

Incredible story. They worked all night making three installations in the walls 
and were about to plaster over the transmitters when they were surprised by four 
Indian guards who had been asleep in another room all night. The engineer is 
known to the Indians, who were told by the owner not to let anyone enter the 
house, and he told them our frightened technicians were simply some electricians 
he brought to work. At five o'clock in the morning? While the engineer occupied 
the Indians, the technicians ripped the installations out of the walls and packed 
up. 

The Czechs are visiting the house every day and are bound to notice the big 
holes left where the installations were ripped out. Noland gave the engineer some 
money to buy silence from the Indians but the engineer will have difficulty 
making explanations to the Czechs. He'll just have to play dumb and hope the 
Indians keep quiet. 

It may be too late to try again because the Czechs will soon be moving in, so 
I suppose headquarters will ask for telephone tapping instead. We have technical 
problems on this operation too — the tap on the Cuban Embassy still isn't working 
right. Headquarters wanted us to try a new type of equipment that actuates the 
tape-recorders from the sound on the telephone wires instead of from changes of 
voltage. The trouble is that the wires pick up a near-by radio station and all we're 
getting is reels and reels of music. 

The only real casualty of this botched job will probably be my dog. Poor 
Lanita. I tested the dog tranquillizer on him last week just in case the Czechs 
suddenly put guard dogs at the house — several years ago the station spent about 
five nights using this special powder mixed with hamburger meat, but they 
couldn't get the Czechs' dogs to sleep so they could make an entry. Now, 



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however, only a few minutes after I gave Lanita the prescribed dose he began to 
fade away. Hours passed and he just went into a coma. The vet came the next day 
and took him away, saying his central nervous system was paralysed. He's still at 
the kennels and if he dies I will send a big bill to the TSD. 

Quito 24 September, 1961 

The CTE convention got underway in Ambato yesterday and it was almost 
like the Congress. Arosemena was one of the guests, and when the ceremonies 
began a group of Velasquistas who had infiltrated the theatre began shouting 
vivas to Velasco and abajos to Arosemena and communism. The CTE people 
started shouting vivas to Cuba and Arosemena and a vast fist- fight ensued. Pistols 
were fired into the air, stink-bombs were set off, and only when the police arrived 
and filled the theatre with tear-gas could the brawl be stopped. It continued in the 
street outside, however, while the inauguration ceremony began in the lingering 
stench of tear-gas combined with stink-bombs. 

Velasco simply cannot learn to compromise; this episode can only be 
counter-productive. 

Quito 25 September 1961 

Now I know what happened to the agents in Cuba on the other end of the 
secret-writing channel. El Comercio this morning carries a front-page article on 
the arrest of Luis Toroella % and the other AMBLOOD agents and a story about 
their plan to assassinate Castro. The article is a wire-service dispatch from 
Havana based on yesterday's Cuban government press release and the El 
Comercio article is naturally headlined with reference to the Quito- Havana 
secret-writing channel. 

Apparently the agents told everything, but the story doesn't include the 
number of the Quito post-office box, which is under Colonel Paredes's true name. 
I sent a priority cable to the Miami station asking that they inform us if the box 
number was revealed, because Colonel Paredes will need to cover himself to 
protect the surveillance team. The agents undoubtedly were arrested several 
months ago, perhaps at the time of the Bay of Pigs invasion, but Miami should 
have told us so we could cancel the box and perhaps destroy the records of the 
name of the holder. 



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I hadn't known they were planning to assassinate Castro but the press report 
reveals a detailed plan using bazookas in an ambush near the Havana sports 
complex. The radio channel must have been used for this operation. No 
indication on how they were caught — I hope it wasn't from my bad SW 
technique. No indication either of when they'll get the paredon [1] — maybe 
already. 

Quito 3 October 1961 

The CTE set tomorrow as the day for the twenty-four-hour general strike 
against the July economic decrees. They claim 500 unions will participate and 
have been joined by the FEUE and by the Socialist Party of Manuel Naranjo. 
Velasco described the strike as a proclamation of revolution against his 
government, adding that if the new taxes are repealed there will be no money for 
'teachers, police and military'. 

For the past few days the government has been promoting a propaganda 
campaign against the strike. Large numbers of 'unions' which are really 
Velasquista political organizations have been publishing statements of boycott. 
But the only real unions boycotting the strike are the Catholic CEDOC and our 
own free trade-union movement including CROCLE, both of which are for 
annulment of the taxes but against strengthening the CTE. 

Tonight Baquero de la Calle, our Minister of Labor, made a nationwide radio 
broadcast in which he called the strike a subversive political action having 
nothing to do with labour matters, to counter CTE insistence that the strike is 
purely for economic motives having nothing to do with politics. Both are wrong 
because the strike is both political and economic, but we're against it because of 
its extreme-left promotion. 

No one doubts there will be violence when the strikers set up road-blocks to 
stop transportation. We've set up special communications with our police agents 
to get timely news on their reports from around the country. Tension is high. 



Quito 4 October 1961 



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Velasco is truly incomprehensible. This morning most of the commercial 
activities in Quito and Guayaquil were normal and it was evident that the strike 
would be only partially successful. However, by noon the police cavalry and 
Army tanks had made such a show of force that everything closed, and as the 
afternoon went on the strike became total in both cities. If the government hadn't 
created such a climate of fear the strike would probably have been a failure. But 
there was considerable violence in the provinces, especially at Tulcan, on the 
Colombian border. Several have been killed and wounded there. 

Quito 6 October 1961 

The strike continues in Tulcan. Yesterday a Congressional Commission that 
included Manuel Naranjo went there along with the Minister of Government and 
other high police and security officials. The meeting of the Congressional 
Commission, the Minister's group, and the Tulcan strike commission turned into 
a political rally against Velasco and the government. The crowd, in fact, became 
so menacing that the Minister had to seek refuge in a government building under 
military protection. 

Today a popular strike committee in the coastal province of Esmeraldas 
decided to follow the lead in Tulcan by extending the strike indefinitely. 

Velasco continues the hard line. Four of the principal CTE leaders are being 
held since the day before the strike, and an arrest list of nineteen others has been 
published. 

Quito 11 October 1961 

Velasco ended the strikes in Tulcan and Esmeraldas by promising public 
works, and tomorrow he goes to Tulcan to listen to complaints. A few days ago in 
Guayaquil he again defended unification and the new taxes, but he had the Mayor 
accuse Arosemena of subverting public order from the Presidency of the 
Congress. The Congress is now in its thirty-day extraordinary period, but there is 
little sign that anything of significance will result — probably more riots and 
clashes with Velasco. No one expects the lull of the past two days to continue. 

Today the national golf tournament ended: I was awful but Noland and his 
wife played well. I'm skipping the celebrations at the club tonight because Janet 
is due to deliver any day. Her obstetrician is the Quito golf champion and will be 



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leading the party tonight. I hope his early prediction of delivery on Columbus's 
Day will be slightly off because he won't be in condition tomorrow. 

Quito 12 October 1961 

He was right! I had to get Alberto out of the golf-club at five o'clock this 
morning. Miraculously everything was perfect — a boy. 

Quito 16 October 1961 

The political security office of the Ministry of Government has invented a 
'plot' as a pretext for arresting opposition leaders. It's so unlikely that it will 
probably make Velasco look worse than ever. For the past three days political- 
security agents have been arresting opposition leaders, including a leftist deputy 
who tried to question the Minister of Defense last August, and some of the 
rightist leaders of the National Defense Front. Luckily none of our agents is 
among the sixteen arrested although the security agents are looking for 
communists and conservatives alike. 

The 'plot' was announced today by the Director-General of Security who runs 
the political security arm of the Ministry of Government — an office we've 
purposely stayed far away from. Leaders of the 'plot', which was to break out 
tomorrow night, are from the extreme right and the extreme left. A sizeable 
quantity of arms was put on display, said to be of Iron Curtain origin and found 
in the homes of communists during raids. No thinking person could believe such 
a transparent fabrication, but Velasco obviously hopes it will rekindle the support 
he needs from the poor and uneducated if he decides to close the Congress by 
force. 

In answer to the arrests and 'plot' the Liberals, Conservatives, Social 
Christians, democratic Socialists and the fascist ARNE all joined today in a 
coordinating bureau to fight assumption of dictatorial powers by Velasco. 

Jorge Acosta, } the Minister of the Treasury, returned from Washington 
today. He tried to make the trip sound successful by telling reporters of several 
loans that are 'pending' and' ready to be signed', but he wasn't able to bring 
immediate relief. Velasco must certainly be disappointed. 

Almost unnoticed in this atmosphere of crisis was the resignation today of 
Jose Baquero de la Calle, our Minister of Labor. Velasco wanted to get him out, 



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so he let him fire the Guayaquil Fire Chief for irregular use of funds, then 
cancelled Baquero's action, leaving the agent no choice but to resign. He has 
been an ineffective minister and not a particularly effective agent either, so 
Saudade isn't too sorry to see him fired. Now he'll try to ease him off the payroll. 

Quito 17 October 1961 

A shoot-out in the Congress last night has the whole country in an uproar, 
and rumours are beginning to circulate that there may be a military move against 
Velasco. 

At a joint Congressional session last night the loyalist Velasquista mob 
packed the galleries and began hurling orange and banana peelings as well as the 
worst insults they could articulate. Loyalist Velasquista legislators joined the 
rioters in the galleries, and when Arosemena, who was presiding, ordered the 
galleries to be cleared the police refused to act. Stones began to fly from the 
galleries and opposition legislators sought shelter under their desks while others 
formed a protective shield around Arosemena. 

By one o'clock this morning, after nearly four hours of rioting, shots also 
began to be fired from the galleries, some directed right at Arosemena's desk. He 
finally pulled out his own revolver, emptied it into the air, and left the chamber, 
claiming that over forty policemen were in the galleries in civilian dress with 
their service revolvers. 

Today Velasco denied that he is seeking to install a dictatorship, while the 
loyalist Velasquista legislators are justifying last night's riots as necessary for the 
preservation of Ecuadorean democracy. Arosemena said today he will charge 
Velasco before the Supreme Court with trying to assassinate him. In Guayaquil 
today police with tear-gas, firing weapons into the air, broke up a FEUE 
manifestation against the government. This can't go on forever. 



Quito 24 October 1961 

Yesterday the Minister of Government resigned rather than face political 
interrogation by Congress over repression since the general strike three weeks 



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ago. Velasco named Jorge Acosta as Acting Minister of Government, which is a 
break for the station, but Noland thinks the situation may be too desperate to 
hope for productive work with Acosta. 

Today Velasco finally made his expected move for Conservative Party 
support. Noland has been insisting with Davila that he do all he can to sustain the 
Conservatives in making a break with Cuba their condition for supporting 
Velasco. Thus Velasco's offer today of the Ministry of Labor was rejected by the 
Conservatives, and Velasco's position continues to weaken. Acosta told Noland 
that Velasco is as stubborn as ever on breaking with Cuba, but he is going to do 
all he can to convince his uncle that the only hope of survival for the government 
is to break with Cuba and gain Conservative backing. 

I haven't seen anything in writing on whether the Agency or State 
Department want to see Velasco survive or fall — only that our policy is to force a 
break with Cuba. The obvious danger is that Velasco will fall because of his 
obstinacy and that a pliable Arosemena, strongly influenced by the CTE, FEUE 
and other undesirables, will end up in power. This makes Acosta's influence on 
Velasco for the break absolutely crucial. 

Quito 27 October 1961 

We weren't able to re-enter the Czech Legation before they moved in, so the 
audio operation is definitely lost. 

A couple of nights ago someone fired shots through the huge front windows 
of the Legation, but a bomb placed in the garden at the same time failed to 
explode. The windows are very expensive and have to be imported from the US, 
so that will keep the Czechs off balance for a while — what's left of the windows 
is all boarded up. We didn't instruct any agents to make this terrorist attack, but 
Noland thinks it was Captain Vargas, our Chief of Police Intelligence. Vargas's 
office is in charge of investigating the attack. 

I've just taken over a new operation — the Tulcan portion of the ECACTOR 
political-action project. Noland had been meeting irregularly with a leader of the 
Conservative Youth organization there, Enrique Molina, J but guidance and 
funding were difficult because the agent could come to Quito only infrequently 
and Noland lacks the time to go there: two long days to drive to the Colombian 
border and back. 



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The drive between Quito and Tulcan is so spectacular that it's beyond 
adequate expression. There are green fertile valleys, snowcapped volcanoes, arid 
canyons eroded by snaking rivers, lakes smooth as glass, panoramic views from 
heights almost as from an airplane. All the way the cobble-stoned Pan-American 
highway winds around and up and down the mountains, passing through 
colourful Indian villages where every few kilometres the hats, ponchos, even the 
hair-styles change to distinguish one community from another. 

I took money to Molina and told him to use it for the anticommunist front in 
Carchi province but he'll probably use it mainly for propaganda against Velasco. I 
also set up a communications channel for him to report intelligence on political 
unrest and we will try to alternate meetings; one month he'll come to Quito and 
the next I'll go there. 

Quito 1 November 1961 

New violence broke out yesterday in Cuenca when a FEUE manifestation 
against the government was severely repressed by police. The students had been 
joined by a large number of people and when the demonstrators attacked 
government buildings the Army was called in. Seven persons were wounded in 
the shooting. 

Velasco announced that in spite of the violence he will make an official visit 
to Cuenca for its provincial independence celebrations the day after tomorrow. 
There is much speculation that more violence will occur because the people in 
the Cuenca area are so angry at Velasco's failure to alleviate the effects of 
declining prices of the area's products — especially Panama hats. Hunger 
migrations from the province, a rare occurrence even in Ecuador, have been 
going on for some time, and representatives of the Quito government are 
increasingly unpopular in this strongly Conservative and Catholic region. 

Reports from our police agents indicate that the rioting in Cuenca is 
continuing today. 



Quito 3 November 1961 



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Military rule was imposed yesterday in the province of Azuay (of which 
Cuenca is the capital) as at least ten more people were wounded during a popular 
uprising. Velasco fired the provincial governor and other leading government 
officials and sent Jorge Acosta, Acting Minister of Government, to Cuenca for a 
firsthand inspection. Acosta's trip only caused further protest, which was 
followed by more arrests. Municipal authorities in Cuenca cancelled the 
independence celebrations scheduled for today and asked Velasco not to come. 

But Velasco is in Cuenca right now, and many reports are coming from the 
radio and the police that serious new rioting and shooting is going on. 

Quito 4 November 1961 

In Cuenca yesterday at least two were killed and eight more wounded. On 
arrival Velasco headed a procession on foot from the airport into town — a grave 
provocation against the local hostility reflected in funeral wreaths and black 
banners decorating the houses in sign of mourning. Along the way Velasco and 
his committee were jeered, taunted and finally attacked with stones and clubs. 
Shooting followed as the riot was suppressed, but Velasco insisted on presiding at 
the military parade. Afterwards, however, he was forced to give his speech in an 
indoor hall where he blamed the violence on opposition political leaders. 

From Cuenca Velasco is motoring to several small towns for speeches and 
then to Guayaquil. In the Congress today the debate over events in Cuenca went 
on for eight hours. The CTE, FEUE and Revolutionary Socialists have 
condemned Velasco, along with the Conservative Party and the Social Christian 
Movement. A strange alliance for our political-action agents but momentum 
against Velasco dominates the scene. 

Jorge Acosta, Acting Minister of Government, got Velasco's approval to 
expel another Cuban — this time it's the Charge d' Affaires because the 
Ambassador is in Havana right now. After meeting today with the Cuban Charge, 
the Minister of Foreign Affairs announced that the Charge will be leaving. He 
gave vague reasons, suggesting an association between certain Ecuadorean 
political figures and the Cuban government, but he emphasized that the Charge's 
departure does not mean any change of policy towards Cuba. The Charge on the 
other hand said he is leaving for Cuba voluntarily. It's clear that the Foreign 
Minister was reluctant to follow Acosta's order to expel the Cuban — and it's 
equally doubtful that this desperate move by Velasco to obtain support from the 



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Conservative Party and other rightists will work. Acosta told Noland that Velasco 
still refuses to break completely with the Cubans, but he is also going to move 
against the Prensa Latina representative. 

Velasco finally got some good news on economic aid. Two large loans have 
just been signed in Washington: one a 4.7 million dollar loan for development of 
African palm oil and sheep ranching and the other a 5 million dollar loan for 
middle-class housing. Good publicity but no early effects expected. 

Quito 5 November 1961 

Today Jorge Acosta announced that the Cuban Charge is being expelled as 
persona non grata. His clarification has been broadcast continually over the 
government radio network. The Cuban Embassy, however, insisted (in order to 
save face) that the Charge was never told that he is being expelled, while at the 
Foreign Ministry confirmation was made of expulsion rather than voluntary 
return to Cuba. 

Quito 6 November 1961 

If he goes, Velasco will not have gone quietly. More violence today, both in 
Quito and in Guayaquil, where eleven have been killed and at least fourteen 
wounded — all students and workers. We've been sending one report after another 
to headquarters and the Guayaquil base is doing the same. 

Congress went into session at noon and Arosemena accused Velasco of 
having violated the Constitution. A FEUE delegation visited the Congress to 
express support, and about three o'clock this afternoon the Congressional Palace 
was sealed off by Army troops and telephone communications were cut. 

This morning the entire Cabinet resigned, and Velasco, who only arrived 
from Guayaquil at noon, spent most of the afternoon visiting military units. He 
also made a radio broadcast in which he accused Arosemena of proclaiming 
himself a dictator, adding that he was firing Arosemena as Vice-President. 

I'll be spending the night here in the Embassy listening to the police and 
military radios and taking calls from agents in the street. The latest is that 
Arosemena and other legislators were allowed to leave the Congressional Palace 
just after midnight, and as they walked towards Arosemena's house a few blocks 
away they were arrested by Velasco's Director-General of Security. Arosemena 



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and the others have been taken to jail, but several agents believe that it's a 
deliberately dangerous scheme on the part of Arosemena to force Velasco to 
unconstitutional action — which could provoke the military to move against him. 

In spite of the Cabinet resignations, Acosta continues to function as Minister 
of Government. This morning he expelled the Prensa Latina correspondent, a 
Cuban who had been expelled last year under Ponce but had slipped back into the 
country while Araujo was Minister of Government. We're sending situation 
reports to headquarters practically every hour. 

Quito 7 November 1961 

It's all over for Velasco but the succession isn't decided. About five o'clock 
this morning the engineers battalion in Quito rebelled on the grounds that Velasco 
had violated the Constitution in arresting Arosemena, but was attacked by loyalist 
Army units. A ceasefire occurred about 8 a.m. for removal of dead and wounded 
and later in the morning the Military High Command decided that both Velasco 
and Arosemena had violated the Constitution. They later named the President of 
the Supreme Court to take over as President of an interim government. Velasco 
has accepted this decision and the Supreme Court President has taken over the 
offices in the Presidential Palace. 

Velasco visited several of the loyalist military units after leaving the 
Presidential Palace this afternoon and according to military intelligence reports 
he is at the home of friends but asking for asylum in a Latin American embassy. 
Acosta received asylum earlier today in the Venezuelan Embassy. 

Arosemena is making a fight of his own to succeed to the Presidency. He and 
the other legislators were released from prison tonight and went immediately to 
the Legislative Palace where Arosemena convoked a joint session and was 
himself named President. The constitutional limit on Congress's extended session 
ends at midnight tonight, but the Congress is remaining in the Palace with 
Arosemena. 

Tonight I sleep in the Embassy again — just in case the Military Command 
decides to move in favour of either of our two Presidents. Let's hope they stick 
with the President of the Supreme Court, a rightist who would be favourably 
disposed to a break with Cuba and suppression of the extreme left in general. 

Quito 3 November 1961 



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It's Arosemena! This morning the Legislative Palace was surrounded by 
Army paratroopers and tanks but just after noon Air Force fighters flew low over 
the Palace firing their guns into the air to intimidate the Army units. When it 
became clear that the Air Force was backing Arosemena and the Congress, the 
Supreme Court President resigned — he had lasted as President only eighteen 
hours — and the Army units were withdrawn from the Palace. The Military High 
Command recognized Arosemena later this afternoon. 

During the hours before the outcome was known today, URJE and FEU E 
demonstrations in favour of Arosemena broke out in different parts of Quito and 
later expressions of support to Arosemena have poured in from all over the 
country, especially from the CTE organizations, FEUE and URJE. 

While the Legislative Palace was still surrounded this morning Arosemena 
named a centrist Cabinet consisting of two Liberals, two Democratic Socialists, 
one Social Christian, one Conservative and three independents. One of the 
Socialists is Manuel Naranjo who was named Minister of the Treasury. This 
afternoon Arosemena has been meeting with supporters, including Araujo whom 
Arosemena described as 'that great fighter'. But when Araujo got up on a chair 
and tried to give a speech to the crowd milling about, he only got out 'Noble 
people of Quito', when he was shouted down with much ridicule. Arosemena's 
first act, even though he won't be inaugurated until tomorrow, was to convoke a 
special session of Congress for election of a new Vice-President and other 
business. Reinaldo Varea Donoso was presiding officer at the first session today. 

Velasco hasn't given up — quite. From the Mexican Embassy he issued a 
statement that he hasn't resigned and he again reminded everyone of the 400,000 
votes he got last year. Four times elected and three times deposed: a winner on 
the stump but a loser in office. If he had only broken with Cuba he could have 
won Conservative and other right support and weathered the left campaign over 
economic issues. 

Quito 9 November 1961 

This morning before the inaugural ceremony the FEUE organized 'Operation 
Clean-up' which was a symbolic scrubbing down and sweeping up at the 
Presidential Palace to cleanse the place before Arosemena took over. 

Arosemena and his new Cabinet then led a march of thousands from the 
Legislative Palace to the Presidential Palace at Independence Plaza. In his speech 



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Arosemena described Velasco's regime as one that started with 400,000 in favour 
and ended with 4,000,000 against. In promising action instead of flowery 
speeches, he pledged that his government will be one of peace and harmony and 
that he will be President of all Ecuadoreans, not just the privileged few. But from 
our point of view the most important of his remarks was his pledge to continue 
diplomatic relations with Cuba. 

In other ominous indications from the inaugural speeches the President of the 
CTE attacked 'yankee imperialism' while praising the Cuban revolution and 
calling for the formation of a Popular Revolutionary Front. (Formation of the 
Front has already been reported by our PCE penetration agents and will include 
the CTE, Revolutionary Socialists, PCE, URJE, Ecuadorean Federation of 
Indians, and a new student front called the Revolutionary University Student 
Movement.) The FEUE President also spoke, recounting the participation of the 
students in Velasco's overthrow. Although he's a moderate and was elected with 
support from the Guayaquil base student operation, opposition to Velasco has 
been growing too strongly in recent months for economic and other motives to 
permit Alberto Alarcon and his agents to keep the moderate FEUE leadership 
from supporting Arosemena. 

Diplomatic relations with the Ecuadorean government are continuing as if 
Velasco had died or resigned — which means there is no question of formal 
recognition of the new government. Everything's been legal and constitutional. 

Quito 11 November 1961 

The general political atmosphere is one of relief, optimism, satisfaction — 
almost euphoria. After fourteen months of intimidation by Velasco, supporters of 
the traditional parties are happy to see Arosemena in power, at least for the 
moment. 

Davila was elected President of the Chamber of Deputies for the 
Extraordinary Congressional Session. Reinaldo Varea was elected Vice-President 
of the Senate — offering, in his acceptance speech, to die before violating the 
legal norms 'of this new and unmerited honour'. Congress then recessed for two 
days and on Monday they will reconvene to elect a new Vice-President. There's 
going to be plenty of tension over the week-end as deals are made to see who 
becomes number two to Arosemena. The importance of this election is very great 
because no one knows how long Arosemena can last with his frequent drinking 



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bouts. Noland thinks Varea, one of the leading candidates, has a good chance. 
The Rector of Central University, a Liberal-leaning independent, is the main 
contender and is backed by the FEUE and extreme left. 

Velasco was put on a Panagra flight to Panama this afternoon. Most of the 
country is peaceful again and the vandalism and looting of stores has 
disappeared. From the general strike on 4 October until now, at least thirty-two 
have died in five cities and many more were wounded, forty-five in Quito alone. 
It wasn't exactly a bloodless coup. 

Quito 13 November 1961 

Noland has pulled off a coup of his own. Over the week-end Varea called for 
a meeting at the Hotel Quito safe house. He wanted to know if Noland knew 
where he might get support for election as Vice-President, particularly whether 
Noland thought the Conservatives might support him. Noland said he thought so, 
but naturally had to be tactful in order not to reveal any relation with Davila or 
other rightist agents. 

Later Noland met with Davila who asked for advice on whom the 
Conservatives should support for Vice-President. Noland was able to promote 
Varea discreetly, reasoning that if the Central University Rector were elected, the 
Vice-Rector, a Revolutionary Socialist, would take over the University. Davila 
pledged to throw the Conservative vote to Varea. Later Davila and Varea met for 
agreement, and Noland is convinced that neither knew of the other's meeting with 
him. 

This morning a notice in El Comercio placed through Gustavo Salgado 
compromised the Rector pretty badly. It was an announcement of support 
attributed to the Ecuadorean Communist Party and URJE. Denial will come but 
too late because Congress reconve6ed at noon to elect the Vice-President. 

The galleries were packed by the CTE and FEUE militants screaming for the 
Rector's election. Davila was the presiding officer and on the first ballot Varea 
got sixty-four votes — the most of the four candidates but twelve short of the two- 
thirds needed. When the results of this vote were announced the galleries began 
to riot. Varea was elected on the next ballot and the FEUE and CTE people really 
broke loose, showering Davila with stones, spit and wads of paper. No police 
around as usual. 



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Varea, in his inaugural speech after Davila proclaimed him Vice-President, 
seemed a little too humble: 'You will see that I lack the capacity to be Vice- 
President of the Republic. I am full of defects, but against this is my life, which I 
have filled with modesty and sacrifice. You and I with the help of God can solve 
little by little the great problems that affect the Ecuadorean people.' Noland said 
he's going to raise Varea from seven hundred to one thousand dollars a month, 
and if he gets to be President we'll pay him even more. 

Senator Humphrey arrived yesterday and we're reporting on possible 
demonstrations against him. He'll visit Arosemena and address the Congress, but 
yesterday he was right on target in remarks to newsmen: the US is ready to 
finance the development of poor countries but their governments have to effect 
agrarian, tax and administrative reforms. Otherwise the US will just be financing 
eventual bolshevization. 

Quito 17 November 1961 

Arosemena's government is not yet two weeks old but there are clear signs 
that he will have significant leftist participation in his regime. Appointments at 
the Minister and Sub- Secretary level like Manuel Naranjo, the new Minister of 
the Treasury, are certainly acceptable. But jobs on the middle level are 
increasingly falling into hands of Marxists and other leftists who are unfriendly 
to the US even though they may not be formally affiliated with the PCE or the 
Revolutionary Socialists. The objectionable appointments are mostly in education 
and the welfare and social-security systems, although the new governments of 
Guayaquil and Guayas Province are also taking on an unfortunate colouring. 

Both in the station and at the Guayaquil base we have been preparing 
memoranda on the new faces in Arosemena's government for the Ambassador, 
the Consul-General and the State Department in Washington. The memoranda are 
based on our file information and also on queries to our PCE penetration agents 
on Party reaction to the appointments. First indications are that influence from 
the extreme left will be much greater under Arosemena than under Velasco. 

Reaction from the State Department and from headquarters is moderately 
alarmist and headquarters has sent special requirements on continued close 
monitoring of Arosemena appointments. The worry is that this is only the 
beginning and that Ecuador will continue sliding to the left much as Brazil is 
moving that way already. On the Cuban question the Foreign Ministry announced 



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today that the Cuban Charge expelled by Velasco can now remain — in the 
confusion during Velasco's last days he had stayed on in Quito. 

To counter these developments we are going to start a new round of 
propaganda and political-action operations through the ECACTOR agents such 
as Davila, Perez, the National Defense Front and propaganda agents such as 
Gustavo Salgado. Reinaldo Varea, the Vice-President, will also be extremely 
important because he is well-known as an anti- communist. He's a retired 
lieutenant-colonel in the Army and he studied at Fort Riley and Fort Leavenworth 
in the US. He was also Ecuadorean military attache in Washington and advisor to 
the Ecuadorean representative on the Inter-American Defense Board, Sub- 
Secretary of Defense and later Minister of Defense. 

As an opening and somewhat indirect thrust, the Guayaquil base had the 
CROCLE labour organization publish a half-page statement in the newspapers 
yesterday on the danger of communism and the subservience of the CTE to the 
WFTU in Prague. It called for repression of communism, warned against opening 
diplomatic relations with the Soviet Union, and forecast the establishment of the 
Ecuadorean Confederation of Free Trade Union Organizations as a democratic 
alternative to the CTE. 

Arosemena has started a shake-up in the internal security forces. Today an 
investigation was started to verify the lists of agents on the role of the National 
Security Directorate, the political security office responsible for Arosemena's 
arrest on the night of 6-7 November. It is expected that many of the agents listed 
simply do not exist and that their salaries were pocketed by top officers of the 
NSD. 

The top echelons of the National Police are also being shaken up. Captain 
Jose Vargas, Chief of the Police Intelligence organization, will undoubtedly be 
purged because he is well known as the leader of a secret pro-Velasco 
organization within the police. We're hoping, however, that Lieutenant Luis 
Sandoval, { the chief technician under Vargas and fairly apolitical, will not be 
moved. 



Quito 20 November 1961 



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The station programme for penetrating the PCE is suddenly in better shape 
than ever. The Pichincha PCE members have just elected a new Provincial 
Committee and not only was Basantes re-elected but Cardenas and Luis Vargas J 
were elected too. This gives us three agents on the eight-member committee 
which is comparable to a national Central Committee because of the growing 
split between the coastal leadership under PCE Secretary- General Pedro Saad 
and the sierra leadership under Rafael Echeverria, chairman of the Pichincha 
Provincial Committee. 

I've taken over another operation from Noland — this time it's Colonel 
Oswaldo Lugo, J our highest-level penetration of the National Police. The other 
night Noland introduced me to Lugo who advised that he has been appointed 
Chief of the National Police in the Southern Region with headquarters in Cuenca. 
He won't be leaving for a few weeks, and meanwhile he will introduce me to his 
stepson, Edgar Camacho, J a university student who will serve as cutout for 
reports from Lugo's sub-agents in the CTE. Lugo expects to come to Quito at 
least once a month when we'll meet, but he'll send urgent reports through 
Camacho. A very friendly, intelligent and sharp officer. 

Operations at the Guayaquil base got a jolt yesterday when their most 
important labour and political intelligence agent died suddenly. He was Emilio 
Estrada Icaza, J director of one of Ecuador's largest banks, president of a 
fertilizer company, former Mayor of Guayaquil and well-known collector of pre- 
Hispanic artifacts. It was through Estrada that the base organized the successful 
campaign to oust Saad from the Senate and then formed the CROCLE labour 
organization. 

Quito 19 December 1961 

There has been a flurry of activity prior to the Christmas lull, with little of 
particularly happy significance to us. Three days ago Arosemena was the 
principal speaker at the Congress of the CTE-controlled Ecuadorean Indian 
Federation. He shared the platform with the CTE President, a Revolutionary 
Socialist; Carlos Rodriguez, the PCE organizer in charge of the Indian 
Federation; and Miguel Lechon, an Indian and PCE member who was elected 
President of the Federation. In his speech to the thousands of Indians trucked into 



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Quito for the ceremony, Arosemena promised quick action to abolish the 
huasipungo. 

The Indian Congress was followed yesterday by the Congress of coastal 
campesinos which is the CTE'S organization for rural workers on the coast. 
Arosemena was also the principal speaker at this Congress which, like the Indian 
Congress, was highly successful for the extreme left. 

Student operations of the Guayaquil base under Alberto Alarcon have 
suffered another defeat. The National FEUE Congress recently ended in 
Guayaquil and the extreme left dominated. Guayaquil University, with the FEUE 
chapter run by URJE militants, will be the national seat for the coming year. 
Delegations from the universities of Cuenca and Portoviejo, which are controlled 
by Alarcon, walked out of the Congress when resolutions, supporting the Cuban 
revolution and condemning the Alliance for Progress, were passed. Protests 
against the take-over by the extreme left were also made through Davila and the 
Catholic University Youth Organization and through Wilson Almeida, editor of 
Voz Universitaria. 

We also had a setback in student operations when a Revolutionary Socialist 
was elected President of the Quito FEUE chapter. After the voting the new 
officers issued a statement supporting Arosemena on the need for agrarian reform 
and on 'non-intervention' with regard to Cuba. 

Now both the Quito and the Guayaquil FEUE chapters, as well as Loja, are 
in extremist hands. Meanwhile URJE continues to dominate the streets. A few 
days ago a group of Cuban exiles (several hundred have arrived to reside in 
Guayaquil) was attacked by URJE militants as they reported to a government 
office to register. 

Operations with the National Police are in transition. Jose Vargas {was not 
only relieved of command of the Police Intelligence unit — he is under arrest 
along with other members of his secret Velasquista police organization. Luckily 
Luis Sandoval was left untouched and will continue in the unit. I've been seeing 
him much more frequently since Vargas was removed and until we can evaluate 
the new Police Intelligence Chief, Major Pacifico de los Reyes, J Sandoval will 
be our main Police Intelligence contact — in effect he's a paid penetration agent. 
De los Reyes came to the station under a pretext related to some equipment we 
gave Vargas, but the visit was obviously to begin contact. Noland and I will 
alternate contact with him without telling him that I am meeting regularly with 
Sandoval. 



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Colonel Lugo has taken command in the Cuenca Zone. Regular 
communications with him will be through Edgar Camacho, his stepson, except 
on the trips he makes to Quito every month or so. He wants me to hold his salary 
and the salaries of his sub-agents for passing directly to him, so I imagine he'll 
come every month. 

Progress continues on the formation of a national free labour confederation. 
On 16-17 December the existing free labour organizations led by CROCLE J 
held a convention for naming the organizing committee for the Constituent 
Congress of the national confederation — to be called the Ecuadorean 
Confederation of Free Trade Union Organizations } (CEOSL). Enrique Amador, 
one of the Guayaquil base labour agents, was President of the convention and 
Adalberto Miranda Giron, } the base agent elected last year as Labour Senator 
from the coast, was a principal speaker. The Constituent Congress was set for late 
April of next year. 

Nevertheless, serious problems are growing behind the facade of progress 
among the free trade-union groups. Mainly it's a question of job security and 
bureaucratic vanity among the leaders of the different organizations. Competition 
among them to get the best jobs in CEOSL, when it's established, is creating 
jealousies and friction. In early November, 10 Division's most important Western 
Hemisphere labour agent, Serafmo Romualdi } (AFL-CIO representative for 
Latin America), came to Guayaquil and tried to establish a little harmony. The 
convention just over was a result of his trip, but the various leaders are still 
fighting. 

Now that Velasco is out, Gil Saudade's Popular Revolutionary Liberal Party 
is bound to decline if not disappear completely. He is going to move some of his 
agents from that party as fast as possible into the CEOSL organization, so that 
with salaried agents in place the organization will have some discipline and order. 
Otherwise it will be forever weak and no match for the CTE. 

Our National Defense Front has issued another call for a break in relations 
with Cuba, but at the recent Conservative Party Convention it was decided to 
give general support to Arosemena while still insisting on a break with Cuba. 
(The photographs published on the Conservatives' meetings are embarrassing — 
they keep a crucifix, about half life-size, on the front of the speakers' table, and it 
looks like a Jesuit retreat.) Davila was elected Sub-Director-General of the Party. 
All the other political parties of importance have also held conventions, and all 
are continuing general support to Arosemena. 



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The State Department, too, is going to gamble on Arosemena and, perhaps, 
on the anti-communist tradition in the military. A few days ago a new loan was 
announced: 8 million dollars for budget support from the US government — forty 
years at no interest. It had originally been negotiated by Jorge Acosta as Minister 
of the Treasury under Velasco. 

Congress recessed until next August with practically no legislation to show 
for its 112-day session that cost over ten million sucres. Incredibly, Congress 
took no action to repeal the decree on unification of the exchange rate that had 
unified the opposition to Velasco. Arosemena and the CTE also seem to have 
forgotten their big issue. 

Quito 23 December 1961 

The pace is slowing for the end-of-the-year celebrations and we've been 
taking advantage to make the rounds with whisky, cigarettes, golf-balls and other 
gifts. Noland is taking the new Administrative Assistant, Raymond Ladd, J 
around to meet the Quito travel-agent and tourism crowd so that he can take over 
and expand the station travel-control operations. The new principal agent will be 
Patricio Ponce, J an old friend of Noland and prominent bullfight figure, whom 
Ladd is going to set up in a cover office as soon as possible. In January I'll also 
turn the EC STACY letter intercept over to Ladd. 

We were fortunate to get Ladd for the administrative job, which is usually 
filled by a woman, because he can handle some operations too. During his 
previous assignment in San Jose, Costa Rica, he learned some operational 
techniques, and although he was refused the operations training (for lack of 
formal education) Noland wants to use him on non-sensitive matters. He works 
in perfectly because he's a champion golfer, poker addict and general hustler. 

When I stop to think about the excitement and continual state of crisis over 
the past year, I realize that we've tried to attain only two goals and have failed at 
both. We haven't been able to bring about a break in diplomatic relations with 
Cuba, and we haven't been able to get the government to take action against the 
growing strength of local communist and related movements. With Velasco, we 
made no direct effort to overthrow his government. But by financing the 
Conservatives and Social Christians in the quasi-religious campaign against Cuba 
and communism, we helped them destroy Velasco's power base among the poor 
who had voted so overwhelmingly for him. By the time Velasco introduced the 



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new taxes and unification of the exchange rate, our campaign, led by the rightists 
and assisted by inflation, had already turned popular opinion against him. It was 
an easy matter then for the CTE, URJE, FEUE and others with extreme-left 
inclinations to usurp the anti-Velasco banner using Arosemena as their anti- 
oligarchical symbol and as legitimate successor. 

Our principal tasks in the coming months will be to renew the campaign 
against relations with Cuba through the National Defense Front and other 
operations while monitoring carefully the penetration by the extreme left of 
Arosemena's government — and their preparations for armed action. Although 
both the second and third in succession to Arosemena are on our payroll, it would 
be difficult to argue that the present security situation is an improvement on the 
Velasco regime. 

The fundamental reasons why there is any security problem at all remain the 
same: concentration of wealth and power in the hands of the very few with 
marginalization of the masses of the people. Such extreme injustice can only 
encourage people to resort to extreme solutions, but there is still no sign of the 
reforms that everyone talks about. I wonder about reforms. Certainly the attitudes 
of my friends — whether blue-blood conservatives, new -rich liberals or concerned 
independents — are not encouraging. Their contemptuous term for the poor who 
supported Velasco — the chusma — shows how much distance has still to be 
travelled. 

My son is only ten weeks old but already he's beginning to show some 
personality and awareness. Proud father, yes I am — he was baptized three weeks 
ago in the old church in Cotocollao in a beautiful white dress given by the 
families in the station. 

I'm not sure what to do about Janet. We continue to grow apart for lack of 
common interests. She knows practically nothing of my work, and her lack of 
interest in politics and the language has turned her to bridge with other American 
wives who tend to complain over trivia. I must help her, but the strain of daily 
events leaves so little energy — except for golf where I'm spending most of my 
free time. It's an unfair escape, I know, but it's also a relaxation. 

Quito 2 January 1962 

The Cuban Sub-Secretary of Foreign Relations, Carlos Olivares, is back in 
Ecuador — this time drumming up support in advance of the OAS Foreign 



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Ministers Conference scheduled for later this month in Punta del Este, Uruguay. 
At the Conference, the US government hopes to get some collective action going 
against Cuba — at least a resolution that all countries still having diplomatic and 
commercial relations with Cuba move to break them. Yesterday Olivares met 
with Arosemena at a beach resort and Arosemena reaffirmed his policy of non- 
intervention towards Cuba. Today he said, Ecuador will be against any sanctions 
against Cuba at the Punta del Este Conference. 

One reason why we're trying to isolate Cuba is that headquarters believe the 
Cubans are training thousands of Latin Americans in guerrilla warfare, sabotage 
and terrorism. Every station is required to report on travel to Cuba, or to Moscow 
or Prague, which are longer but also widely used routes to Cuba. Right now there 
are at least sixty-two Ecuadoreans in Havana invited for the celebrations of the 
third anniversary of the revolution. Some no doubt will be funnelled off to the 
training camps. Miguel Lechon, President of the Ecuadorean Federation of 
Indians, is in the group. 

Quito 16 January 1962 

Our new campaign is off to a bang — literally. The national convention of 
URJE was to have opened in Cuenca two days ago but during the night before 
bombs exploded in the doorways of two Cuenca churches. There were no injuries 
from the bombs — the anti-communist militants under Carlos Arizaga Vega were 
careful — but large 'spontaneous' demonstrations against the bombings occurred 
on the day the convention was to start. Public authorities then banned the URJE 
convention in order to avoid bloodshed. 

The Conservative Party under Davila's direction has called on Arosemena for 
a definitive political statement on Cuba and communism (the prelude to new 
Conservative pressure). He answered that Ecuadoreans should concentrate on 
national problems that are' above' the problem of Cuba. Davila is organizing a 
demonstration for the day after tomorrow in Quito in solidarity with the Cuenca 
one. 

Yesterday the Popular Revolutionary Movement (formed by the PCE, URJE 
and other extreme leftist organizations when Arosemena took over) sent a 
delegation to visit the Minister of Government. They told him that the bombings 
in Cuenca were not their work and that they reject terrorism as a political 



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instrument. Last night in Guayaquil Pedro Saad's home was bombed — again no 
one injured. 

The main theme of our propaganda in recent days has been the shooting last 
month in Havana when a group of Cubans tried to obtain asylum in the 
Ecuadorean Embassy by crash-driving an automobile on to the grounds. Cuban 
security forces opened fire to impede them and several bodies were carried away. 

Gil Saudade keeps grinding away with his international organizations. This 
time it's the Ecuadorean affiliate of the World Assembly of Youth J (WAY) — 
called the National Youth Council. } It groups together students, workers, sports 
organizations, rural and religious youth groups, Boy and Girl Scouts and the 
Junior Red Cross. Gil runs this operation through Juan Moeller J who is 
President of the Ecuadorean Junior Red Cross and who just put in another leader 
of the Junior Red Cross as Secretary-General of the Youth Council. The main 
business in coming months will be to arrange for Ecuadorean participation in the 
WAY Congress scheduled for August and to pass headquarters' guidance to the 
Ecuadorean leader on which issues to support and which to oppose. 

Quito 19 January 1962 

The campaign is back in full swing in Quito. Yesterday's rally against Cuba 
and communism was enormous — and considerably helped by the government. 
After days of promotional work by the ECACTOR-fmanced organizers; 
yesterday morning the Minister of Government, a Liberal, prohibited public 
political demonstrations throughout the country until further notice including the 
rally planned for yesterday afternoon. His decision was based on the recent wave 
of bombings and the tension caused by our renewed campaign. 

The organizers sent the word around that the rally would take place in spite 
of the prohibition as a show of solidarity with the recent demonstrations in 
Cuenca and Guayaquil. The crowd gathered at a theatre on the edge of the 
downtown area, soon grew into thousands, and began to move towards the 
Independence Plaza. Police tried to stop it with tear-gas and cavalry but lost the 
pitched battle that followed in spite of wounding twelve people. The 
demonstrators also attacked an URJE counterdemonstration which quickly 
disappeared. Riobamba thanks to the efforts of a new agent of Noland's named 
Davalos. } Through Renato Perez and Aurelio Davila, Noland is also getting 
money out for demonstrations in Loja and other provincial cities in days to come. 



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The Punta del Este Conference opens today but in spite of all the pressure 
we're bringing on the government through the right it appears that Ecuador will 
not support any joint move against Cuba. 

Quito 31 January 1962 

The Punta del Este Conference finally ended yesterday All our efforts to get 
sanctions against Cuba failed, thanks to opposition from countries like Ecuador. 
Even on the resolution to expel Cuba from the OAS only fourteen countries 
voted in favour with Ecuador among the abstentions. 

Today the Social Christian Movement formally ended its participation in the 
Arosemena government, and the Conservative Party is issuing a statement 
against the government's position at Punta del Este. The Foreign Minister, a 
prominent Social Christian, will either have to resign or quit the party. 

Last night, the Czech Legation was bombed again and the huge new 
windows just installed because of the October attack were completely shattered. I 
drove by the Legation on my way to work this morning and the carpenters were 
already at work boarding up again. The bombers escaped through the heavy fog 
last night — must have been the Social Christian squad. 

Quito 28 February 1962 

Most of the important political parties have held conventions this month to 
begin preparations for the local, provincial and Congressional elections 
scheduled in June. Where possible we have instructed agents to push for 
resolutions on the Cuban and local communist issues. 

Once in the Independence Plaza the crowd frequently shouted against the 
government and Arosemena. Speakers attacked communism and Castro and 
called for a break in relations with Cuba while urging Ecuadorean support for a 
programme of sanctions against Cuba at the coming Punta del Este Conference. 

Yesterday, when the Minister of Government announced the prohibition of 
demonstrations he denounced the right's 'battle plan' founded on the government's 
lack of definition on communism and Cuba. Today the Minister called for a 
pause in the fighting between Ecuadoreans over 'external problems', while the 
Cardinal issued another anti-communist pastoral letter accusing the communists 
of the bombings in the Cuenca churches. 



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The campaign is getting under way in Tulcan as well. Yesterday an anti- 
communist demonstration was held in spite of the prohibition and afterwards the 
demonstrators clashed with leftists in a counter-demonstration. 

The Ambassador is also active making propaganda that nicely complements 
ours. Yesterday with considerable publicity he presented a cheque to Manuel 
Naranjo } representing the second instalment of the 8 million dollar budget 
support loan announced just after Arosemena took over. Photographs of the 
Ambassador handing over the cheque were prominent in the newspapers this 
morning. 

Quito 21 January 1962 

In Guayaquil the base financed a demonstration yesterday. Thousands turned 
out after a bomb exploded in the morning at the entrance to one of the main 
churches — again with no injuries. These bombings are mostly being done by a 
Social Christian squad in order to whip up emotions. One would think the people 
would realize this, but Renato Perez, Noland's principal Social Christian agent, 
says they can keep it up as long as is needed. Participating organizations in the 
Guayaquil demonstration were the Defense Front, our CROCLE labour 
organization, the Liberals, Conservatives, Social Christians and the fascist 
ARNE. 

An anti-communist demonstration was also held yesterday in Manuel 
Naranjo was only partially successful at the Socialist Party convention where his 
party decided to join again with the Liberals in the National Democratic Front as 
a joint electoral vehicle. The statement on re-establishing the Front called for 
struggle against the totalitarian movements now operating in Ecuador — but also 
affirmed the party's belief in Marxist philosophy as 'adapted to the Ecuadorean 
political and economic reality'. In a foreign policy statement issued two days 
after the convention closed, the principle of non-intervention in Cuba was 
sustained along with opposition to expulsion of Cuba from the o A s and to the 
economic blockade. 

The Conservative Party has issued another statement insisting that 
Arosemena dismiss communists and pro-communists from the administration 
while alleging that a communist plot is underway for uprisings to occur soon 
throughout the country. The Conservatives in Azuay Province (Cuenca) have 



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elected Carlos Arizaga Vega, J one of our principal ECACTOR agents there, as a 
party director. 

Araujo is also active trying to build an organization that will attract leftist 
Velasquista voters. His new People's Action Movement held an assembly today 
in preparation for the elections. 

Our own campaign continues to consist of stimulating charges of communist 
leanings of appointees in the government. Debate has also continued over 
Ecuadorean failure to back resolutions against Cuba at Punta del Este, and 
Arosemena is being forced on the defensive. Through political action and 
propaganda operations we are trying to repeat what we did with Velasco: cut 
away political support on the Cuban and communist issues so that only the 
extreme left is left on his side. For his part Arosemena has been protesting 
frequently in public that communists will never become an influence in his 
government. 

The Argentine break with Cuba a few weeks ago, which was the climax of 
increasing military pressure on President Frondizi, has already generated a spate 
of new rumours that the Ecuadorean military will bring similar pressure on 
Arosemena. The rumours are mostly rightist-inspired as suggestive propaganda 
targeted at the military, but they may well have an effect — especially since less 
than three weeks after the break Argentina got 150 million dollars in new 
Alliance for Progress money. Now only Ecuador and five other Latin American 
countries still have relations with Cuba. 

Quito 1 March 1962 

In another effort to create military ill-feeling towards the left, the Social 
Christians infiltrated a FEUE march today in order to shout insults against the 
military that appeared to come from the marchers. The march was through the 
downtown area to the Independence Plaza where Arosemena spoke and the 
leaders of the march presented a petition for increased government support to the 
universities. The situation is indeed grave — professors at Central University, for 
example, haven't been paid since last December. 

The Social Christian plan worked perfectly. The march was headed by the 
President of the FEUE, the Rector and Vice-Rector of the University and the 
Ministers of Education and Government. At the Independence Plaza just before 
the speeches began, shouts were clearly heard of 'Death to the Army' and 'More 



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universities and less Army'. An almost electric current is passing through the 
officer corps of the military services and new rumours, not ours this time, are 
beginning on possible military reactions. 

Quito 3 March 1962 

Reactions to the Social Christian infiltration of the FEUE march have been 
most satisfactory. Yesterday the Minister of Defense and the chiefs of all the 
services issued a statement in which they admitted breaking a long silence on the 
many activities going on that are designed to sow chaos in the armed forces and 
separate them from the Ecuadorean people and the government. These activities, 
according to the statement, are directed by international communism through 
campaigns in periodicals, magazines, radio, rumour, strikes, work stoppages, 
rural risings, militia training and, most recently, the FEUE demonstration of 1 
March. Instead of a demonstration for greater economic resources, according to 
the statement, the march was perverted to make propaganda against the armed 
forces. The statement ended with an expression of the determination of the 
Minister and the service chiefs to take whatever measures are necessary to defend 
military institutions. 

The military statement yesterday coincided nicely with a rally we financed 
through Aurelio Davila with participation of the Conservatives, Social Christians, 
ARNE, and Catholic youth, labour and women's organizations. The purpose of 
the rally was another demand for a break in relations with Cuba, and Davila was 
the principal speaker. He blamed the insults of 1 March against the military on 
communists and Castroites who seek to form their own militias. He accused 
Arosemena, moreover, of giving protection to the communist menace and, as 
President of the Chamber of Deputies, he sent a message of support to the 
Minister of Defense and the chiefs of the services. 

Quito 16 March 1962 

Fate's heavy hand has just fallen on our Vice-President, Reinaldo Varea. 
Yesterday the government announced that a million dollars' worth of military 
equipment purchased by a secret mission sent to the US last year by Velasco has 
turned out to be useless junk. The announcement came just a couple of days after 
one of Velasco's ex-ministers made a public call for Velasquistas to begin 



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organizing for the June elections. Obviously the announcement was made to 
begin a campaign to discredit the Velasquista movement prior to the elections. 

Varea is implicated because as Vice-President of the Senate he was chief of 
the purchasing mission. There is no accusation that any money was stolen, but to 
be swindled out of a million dollars by a US surplus parts company is sheer 
incompetence on someone's part. Photographs of the tanks and armoured 
personnel carriers are being published — some without motors, others with no 
wheels, others simply rusted and falling apart. 

Varea had told Noland that the case might come to the surface but he had 
hoped to keep it under cover. There's no telling how badly this will affect Varea's 
position as Arosemena's successor, but Noland is in a really black humour. 

The PCE has just held one of its infrequent national congresses. Basantes and 
Cardenas attended as members of the Pichincha delegation. Divisions within the 
party over whether to resort to armed action soon or to continue working with the 
masses indefinitely are continuing to grow. Rafael Echeverria, the Quito PCE 
leader, is emerging as the most important leader of those favouring early armed 
action, although Pedro Saad was reelected Secretary-General and remains in firm 
control. Unfortunately neither of our agents was elected to the new Central 
Committee. 

Quito 25 March 1962 

For some days the anti-communist (Social Christian and Conservative) forces 
in Cuenca have been preparing for another mass demonstration against relations 
with Cuba and communist penetration of the government. Noland financed it 
through Carlos Arizaga who will use it to show solidarity with the important 
military command there. The affair was very successful. In spite of police denial 
of permission thousands turned out with posters and banners bearing the 
appropriate anti-communist, anti-Castro and anti-URJE themes. Demands were 
also made for the resignation of Arosemena and his leftist appointees, and 
expressions of solidarity with the military services against their extremist 
attackers were also prevalent. A petition with 2000 signatures was presented to 
the provincial governor, Arosemena's chief representative. 

Colonel Lugo, National Police commander in Cuenca, advised that although 
he was unable to grant permission for the street march because of orders from 



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Quito, he was able to avoid taking repressive measures. The march in fact had no 
police control and there was no disorder. 

Quito 28 March 1962 

The Cuenca military garrison under Colonel Aurelio Naranjo has suddenly 
sent a message to Arosemena giving him seventy-two hours to break relations 
with Cuba and fire the leftist Minister of Labor. The whole country is shaken by 
the revolt although the outcome is uncertain because so far no other military units 
have joined. 

Arosemena spoke this afternoon with Vice-President Varea and with the 
press. He's taking a hard line promising severe punishment for those responsible 
for the rebellion. The traditional parties are ostensibly supporting Arosemena and 
the Constitution, but the Conservatives have issued a statement insisting on a 
break with Cuba and Czechoslovakia and a purge of communists in the 
government. The FEUE, CTE, URJE and other extreme leftists are of course 
backing Arosemena. 

The key is the reaction of the Minister of Defense and the armed services 
commanders here in Quito. We're checking various agents who have access but 
haven't been able to get straight answers because apparently the military leaders 
are taking an ambiguous position. 

This Cuenca revolt is clearly a result of the renewed agitation we have been 
promoting since January through the Conservatives and Social Christians. There 
was no way to tell exactly when action of this sort would occur but several 
sensational events of the past two days have probably had an influence. Yesterday 
news reached Quito of an uprising at the huge Tenguel Hacienda on the coast 
which is owned by a subsidiary of United Fruit and where communist agitation 
has been going on for some time. Eight hundred workers are striking over the 
company's contracting of land to tenant farmers, and the strike has touched off 
rumours of other risings in rural areas. At a Social Christian rally yesterday 
where Renato Perez was one of the speakers the Tenguel rising was attributed to 
the communist leadership of the workers. Also yesterday, in Cuenca, the 
provincial committee of the Conservative Party called on the National Committee 
to declare formal opposition to the Arosemena regime. Key figures in this move 
are Carlos Arizaga Vega in Cuenca and Aurelio Davila Cajas } on the National 
Committee. 



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The other sensation is the overthrow of President Frondizi by the Argentine 
military. Although the Peronist victory in this month's elections is the immediate 
reason for the military move there, we will interpret the coup in our propaganda 
as related strongly to Frondizi's reluctance to break with Cuba and his general 
policy of accommodation with the extreme left. 

Quito 29 March 1962 

The crisis continues. Today the Cuenca garrison issued a public statement on 
the need to break relations with Cuba and Czechoslovakia and to purge the 
government of communists. The Minister of Defense, the Chief of Staff and the 
commander of the Army are all indirectly supporting the Cuenca commander by 
not sending troops to put down the rebellion. In response to today's statement by 
the Cuenca garrison, the Army commander publicly ordered the Cuenca 
commander to refrain from political statements, but he also sent an open 
statement to the Minister of Defense that the armed forces are in agreement on 
the need to break with Cuba. 

Demonstrations have occurred today in most of the major cities: in Quito one 
in favour and one against Arosemena; in Guayaquil in favour of Arosemena; and 
in Cuenca against — marchers there carried posters reading 'Christ the King, Si, 
Communism, No'. 

Arosemena is trying to strike back but in the absence of cooperation from the 
military he's almost powerless. He had the entire Cabinet resign today, accepting 
the resignations of the Ministers of Government (for allowing the security 
situation to degenerate), Labour (as a gesture to the rightists who have focused on 
him as an extreme leftist), and Economy (for being one of the Conservative Party 
leaders of the campaign against communism and relations with Cuba). 

Quito 30 March 1962 

The stand-off between Arosemena and the Cuenca garrison has continued for 
a third day although Arosemena is grasping for an alternative to save face. He 
announced today that within ten or fifteen days a plebiscite will be held on 
relations with Cuba. The idea of a plebiscite has already been proposed by 
several groups including the Pichincha Chamber of Industries whose members 
are suffering the effects of all the tension and instability of recent months. 



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Arosemena may not have ten or fifteen days left for the plebiscite. This 
afternoon in Quito a massive demonstration calling for a break with Cuba was 
sponsored by the anti- communist forces including a four-hour march through the 
streets. At the Ministry of Defense the Chief of Staff, a well-known anti- 
communist, told the demonstrators that he and other military leaders share their 
views on Cuba. The demonstration also had pronounced anti-Arosemena 
overtones. Similar demonstrations have occurred today in Cuenca and Riobamba. 
In the press we are stimulating statements of solidarity with the movement to 
break with Cuba including one from the Popular Revolutionary Liberal Party J 
which Gil Saudade had to wring out of Juan Yepez, Jr. 

In spite of all the crisis other activities continue. Today Noland was honoured 
at a ceremony presided by Manuel Naranjo for his year as a Director of the 
University Sports League. He got a medal and a diploma of appreciation — plenty 
of good publicity. 

Quito 31 March 1962 

A solution is emerging The Conservatives today formally ended their 
participation in Arosemena's government, and conversations between Arosemena 
and the National Democratic Front — composed of the Liberals, Democratic 
Socialists and independents — have begun. One of the Front's conditions for 
continuing to support Arosemena is a break with Cuba and Czechoslovakia. 
Meanwhile the Electoral Court quashed the plebiscite idea for constitutional 
reasons. 

Conservative withdrawal from the government was highlighted by the 
publication today of an open letter from the Conservative ex-Minister of the 
Economy who resigned two days ago. In the letter the Cuenca rightist charged 
communists whom Arosemena has allowed to penetrate the government with 
thwarting the country's economic development. 

The solution, interestingly, has resulted because Varea, the Vice-President, is 
unacceptable to the military high command because of his implication in the junk 
swindle. Otherwise Arosemena would probably have been deposed in favour of 
Varea for his resistance on the Cuban break. The Liberals and others in the 
Democratic Front expect to improve their electoral prospects from a position of 
dominance in the government. And the Conservatives and Social Christians will 
be able to campaign on the claim that they were responsible for the break with 



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Cuba (if it takes place). Everyone is going to be satisfied except Arosemena and 
the extreme left — although Arosemena will at least survive for now. 

The Social Christian bomb squad finally slipped up last night. Just after 
midnight they bombed the home of the Cardinal (who was sleeping downtown at 
the Basilica) and a couple of hours later they bombed the Anti-Communist Front. 
By a stroke of bad luck the two bombers were caught and have admitted to police 
that they are members of the Anti-Communist Front itself. So far they haven't 
been traced to the Social Christian Movement which planned the bombings. 
These produced lots of noise but little damage, to provide a new pretext for 
demonstrations of solidarity with the Cardinal. 

Quito 1 April 1962 

The crisis is over and the Cubans are packing. Today the announcement was 
made that the National Democratic Front will enter the government with five 
Cabinet posts and that relations with Cuba will be broken. The new Minister of 
Government, Alfredo Albornoz, J is an anti-communist independent known 
personally by Noland. (His son is a friend of Noland's and of mine — he's 
President of the YMCA board on which I replaced Noland in January. The new 
minister is an important banker and owner of the Quito distributorship for 
Chevrolets and Buicks. Noland intends to begin a liaison arrangement with him 
as soon as possible.) 

Today new anti-communist demonstrations and marches were held in Quito 
and down south in Loja celebrating the break with Cuba. The Conservatives and 
Social Christians are promoting still another massive demonstration in three days 
to show support for the Cardinal — in spite of the admission by the bombers 
(which in the newspapers was relegated to a small, obscure notice). 

Quito 2 April 1962 

Success at last. Today the new Cabinet, in its first meeting with Arosemena, 
voted unanimously to break relations with Cuba, Czechoslovakia and Poland 
(which just recently sent a diplomatic official to Quito to open a Legation). After 
the meeting Arosemena lamented that the plebiscite was impossible while Liberal 
Party leaders claimed credit for the break. 



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Tomorrow the Foreign Ministry will give formal advice to each mission. 
Besides the Pole there are three Czechs and seven Cubans. The main problem for 
the Foreign Ministry is to find a country with an embassy in Havana that will 
take the asylees in the Ecuadorean Embassy — almost two hundred of them. The 
extreme left has been trying to promote demonstrations against the decision but 
they've only been able to get out small crowds. 

This afternoon we had a champagne victory celebration in the station, and 
headquarters has sent congratulations. 

Quito 4 April 1962 

The Social Christian and Conservative street demonstration today was said to 
be the largest in the history of Quito. Tens of thousands swarmed through the 
downtown streets to the Independence Plaza where the Cardinal, who was the 
last speaker, said that, following the teachings of Christ, he would forgive the 
terrorists who had tried to kill him. Aurelio Davila was one of the organizers of 
the demonstration, and he arranged for a Cuban flag to be presented to the 
Cardinal by a delegation of the exiles. (The main exile organization, the 
Revolutionary Student Directorate, is run by the Miami station and in some 
countries the local representatives are run directly by station officers. In our case, 
however, Noland prefers to keep them at a distance through Davila.) 

Noland is already meeting with the new Minister of Government, Alfredo 
Albornoz, J to pass information on communist plans that we get from our 
penetration agents. Today we got a sensational report from one of Jose Vargas's 
sub-agents to the effect that Jorge Ribadeneira, one of the principal leaders of 
URJE, has called his followers into immediate armed action in a rural area 
towards the coast. Communications with the sub-agent are very bad right now 
but Noland is trying to get more details. When Noland met with the Minister he 
learned that the Minister also has information on the guerrilla operation — it's 
concentrated near Santo Domingo de los Colorados, a small town a couple of 
hours' drive towards the coast from Quito. Tonight the Ministry of Defense is 
sending a battalion of paratroopers to the area to engage the guerrillas. As a 
precaution the Minister has banned all public demonstrations until further notice, 
but he and the Minister of Defense hope to keep the guerrilla operation secret 
until the size of the group is known. That may be impossible, however, because 



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other agents including Lt. Col. Paredes, J the surveillance team chief, are 
beginning to report on the paratroopers' mobilization. 

The thought of facing an effective guerrilla operation is one of our most 
persistent nightmares because of the ease with which communications and 
transport between coast and sierra could be cut. The difficult geography, 
moreover, is ideal for guerrilla operations in many areas, and if the imagination 
of the rural Indians and peasants could be captured — admittedly not an easy task 
because of religion and other traditional influences — the guerrillas would have a 
very large source of manpower for support and for new recruits. This is why we 
have been continually trying to induce government action against the various 
groups of the extreme left in order to preclude this very situation. 

Quito 5 April 1962 

Communications are impossible with Jose Vargas's agent in the guerrilla 
band and little news of substance is coming into the Ministry of Defense from the 
operations zone. I sent Lieutenant- Colonel Paredes down to Santo Domingo to 
see what he could pick up, but he hasn't been able to get close to the operations. 
Our best information from the Ministry of Defense is coming from Major Ed 
Breslin, J the US Army Mission Intelligence Advisor. He has been in Quito only 
a short time but has already worked his way in with the Ecuadorean military 
intelligence people much more effectively than his predecessor. Both Noland and 
I have been working more closely with him on targeting for recruitments in the 
military intelligence services, and our relationship with him is excellent — he 
trained the tank crews that landed at the Bay of Pigs last year. Breslin reports the 
guerrillas are offering no resistance and that several arrests have been made. 

At the Guayaquil airport last night two events related to Cuba will give us 
good material for propaganda. First, an Ecuadorean returning from a three-month 
guerrilla training course in Cuba was arrested. He is Guillermo Layedra, a leader 
of the CTE in Riobamba, whose return was reported to the base by the Mexico 
City station which gets very detailed coverage of all travellers to and from Cuba 
via Mexico through the Mexican immigration service. Data on Layedra's travel 
was passed to Lieutenant- Colonel Pedro Velez Moran, J one of the liaison agents 
of the base. Of propaganda interest are the books, pamphlets, phonograph records 
of revolutionary songs and, especially, a photograph of him in the Cuban militia 



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uniform. Through Velez the base expects to get copies of his interrogation and 
will pass questions at headquarters' request. 

The other case, also the work of Lieutenant-Colonel Velez, occurred during a 
refuelling stop of a Cuban airliner bound from Chile to Havana. It was carrying 
some seventy passengers most of whom were Peruvian students going to study 
on 'scholarships' in Cuba — most likely they were really guerrilla trainees. The 
base asked Velez to get a copy of the passenger list, an unusual demand for a 
service stop, which the base will forward to the Lima station. During the stop, 
however, the pilot was seen to give an envelope to the Third Secretary of the 
Cuban Embassy in Quito (the Cubans haven't left yet) and a customs inspector 
demanded to see the envelope. The Cuban diplomat took out a .45 pistol and, 
after waving it menacingly at the customs inspector, he was arrested by the 
airport military detachment. Only about 1 0 a.m. this morning was he allowed to 
go free, but he was allowed to keep the envelope. 

Quito 6 April 1962 

The press carried its first stories of the Santo Domingo guerrilla operation 
this morning — sensational accounts of 300 or more men under the command of 
Araujo. The Ministry of Defense, however, announced later that thirty guerrillas 
have been arrested along with a considerable quantity of arms; ammunition and 
military equipment. First reports from interrogations indicate that the guerrilla 
group numbers less than 100 and that Araujo isn't participating, but military 
operations continue. 

Although the early interrogation reports also indicate that the guerrilla 
operation was precipitated by the Cuenca revolt and very poorly planned, we will 
try to make it appear serious and dangerous in our propaganda treatment. Most of 
those arrested are young URJE members — followers of Jorge Ribadeneira who 
may well be expelled from the PCE if, as is likely, the Executive Committee 
under Saad had nothing to do with the operation. Reports from PCE agent 
penetrations coincide in the view that Ribadeneira was acting outside party 
control. 



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Quito 10 April 1962 

The Santo Domingo guerrilla affair is wiped up. Forty-six have been 
captured with only a brief exchange of fire. Only one casualty occurred — a 
guerrilla wounded in the foot. All have been brought to Quito and we're getting 
copies of the interrogations through Major Breslin. In an effort to help Pacifico 
de los Reyes J make a good impression in his new job as chief of the intelligence 
department of the National Police, I have been giving him information on many 
of those arrested, which he is passing as his own to the military interrogation 
team. 

Propaganda treatment is only partly successful. The Minister of Defense has 
announced that the weapons seized are not of the type used by the Ecuadorean 
Army and must have been sent from outside the country — although the truth is 
that the weapons are practically all conventional shotguns, hunting rifles and 
M-l's stolen from the Army. Interrogation reports released to the press allege 
(falsely) that the operation was very carefully planned and approved at the PCE 
Congress held last month. 

Press comment, however, is tending to romanticize the operation. 
Participation of four or five girls, for example, is being ascribed to sentimental 
reasons. Those arrested, moreover, once they have been turned over to police and 
are allowed to see lawyers, are saying that they only went to Santo Domingo for 
training in the hope of defending the Arosemena government from overthrow by 
the Cuenca garrison. The FEUE has set up a commission of lawyers for the 
guerrillas' defence, and unfortunately the early public alarm is turning to 
amusement and even ridicule. 

Of continuing importance will be two factors. First, the ease with which the 
guerrillas were rolled up has given the Ecuadorean military new confidence and 
may encourage future demands for government suppression of the extreme left. 
Second, the operation is bound to exacerbate the growing split on the extreme 
left, both inside and outside the PCE, between those favouring early armed action 
and those favouring continued long-term work with the masses. In both cases this 
pitiful adventure has been fortunate for us. 



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Quito 23 April 1962 

Back in the cool thin sierra air after a brief holiday. The Pole, Czechs and 
Cubans have all left so we have no hostile diplomatic missions to worry about 
any more. The telephone tap on the Cubans was only of marginal value because 
they were careful, but I'm going to begin soon to monitor Araujo's telephone and 
perhaps one other if I can arrange for transcription. The technical problems with 
the sound-actuated equipment were never solved so we reverted to the old 
voltage-operated machines. 

Although we tried to keep the Santo Domingo guerrilla operation in proper 
focus it hasn't been easy. The Rio station helped by preparing an article on the 
communist background of one of the girls in the operation, a Brazilian named 
Abigail Pereyra. The story was surfaced through the Rio correspondent of the 
hemisphere -wide feature service controlled by the Santiago, Chile, station — 
Agenda Orbe Latinoamericano. % The story revealed that her father is a Federal 
Deputy and the personal physician of Luis Carlos Prestes, long-time leader of the 
Communist Party of Brazil, while her mother is the Portuguese teacher at the 
Soviet Commercial Mission in Rio de Janeiro. Both parents are leaders of the 
Chinese-Brazilian Cultural Society, and her mother went to Cuba early this year 
to visit Abigail — who was taking a guerrilla training course, according to the 
article. This may help keep her in jail for a while, but public opinion is 
favourable to early release. 

Gil Saudade has established another of his front organizations for 
propaganda. The newest was formed a few days ago and is called the Committee 
for the Liberty of Peoples. % Through this group Gil will publish documents of 
the European Assembly of Captive Nations % and other Agency-controlled 
organizations dedicated to campaigns for human rights and civil liberties in 
communist countries. The agent through whom he established the Committee is 
Isabel Robalino Bollo J whom he met through Velasco's former Minister of 
Labor, Jose Baquero de la Calle. Robalino is a leader of the Catholic Labor 
Center (CEDOC), and is Gil's principal agent for operations through this 
organization. She was named Secretary of the Committee which includes many 
prominent liberal intellectuals and politicians. 



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Quito 27 April 1962 

The government has lifted the prohibition on public political demonstrations 
in effect since the turmoil over the break with Cuba, and the campaign for the 
June elections is picking up steam. Quite a number of our agents will be 
candidates but so far our main electoral operation is in Ambato where Jorge 
Gortaire, a retired Army colonel and Social Christian leader, is working to defeat 
the Revolutionary Socialist Mayor running for re-election. 

Gortaire is also a leader of the Rotary Club and is President of the Ambato 
Anti-Communist Front which we finance through him. Because of his 
exceptional capability the Front is running a single list of candidates backed by 
the Conservatives, Liberals, Social Christians, independents and, of course, the 
fascist ARNE. Noland thinks Gortaire is one of the best agents he has — after 
Renato Perez and Aurelio Davila. 

Gil Saudade is about to see a giant step forward in his and the Guayaquil 
base labour operations. Tomorrow the constituent convention of the free trade- 
union confederation to be called CEOSL J begins, and Gil is fairly certain that 
between the base agents in CROCLE and his Popular Revolutionary Liberal 
Party agents, we will come out in control. In recent months the PLPR agents have 
become increasingly active and Gil is counting on them to offset the divisive 
regionalism of the CROCLE agents. 

Quito 1 May 1962 

The CEOSL — Ecuadorean Confederation of Free Trade Union Organizations 
- is formally established with several agents in control: Victor Contreras Zuniga J 
is President, Matias Ulloa Coppiano J is Secretary for External Relations, and 
Ricardo Vazquez Diaz J is Secretary of Education. Publicity build-up has been 
considerable, including messages of solidarity from ORIT in Mexico City and 
ICFTU and International Trade Secretariats in Brussels. Leaders of other 
Agency-controlled labour confederations such as the Uruguayan Labor 
Confederation } (CSU) were invited. 

The main business of the first sessions was to seek affiliation with the ICFTU 
and ORIT which has just opened an important training-school in Mexico. Soon 
CEOSL will begin sending trainees to the OR IT school, which is run by the 
Mexico City station through Morris Paladino, J the OR IT Assistant Secretary- 



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General and the man through whom 10 Division controls ORIT. (The new 
Secretary-General of ORIT, Arturo Jauregui, J hasn't been directly recruited yet 
although he was here in March to promote the school.) 

Gil Saudade will now have to coordinate closely with the Guayaquil base so 
that his agents, Ulloa and Vazquez, will work in harmony with the base's agent, 
Contreras. None is supposed to know of the others' contact with us. 

Unfortunately the controversy between the Guayaquil base agents from 
CROCLE and the ECCALICO election operation of two years ago came to a 
head. Adalberto Miranda Giron, the Labor Senator from the Coast, was 
terminated by the base several months ago because certain of his inappropriate 
dealings with companies became known. At the CEOSL constituent convention 
he was denounced as a traitor to the working class, the beginning of a campaign 
to get him completely out of the trade-union movement. 

Quito 3 May 1962 

The 'junk swindle' has become Ecuador's scandal of the century and is being 
used increasingly by the left to ridicule the military. Today the Chief of Staff and 
the Commander of the Army issued a joint statement defending themselves from 
attacks by CTE leaders in May Day speeches and other recent attempts to 
connect them with the junk swindle. Final liquidation of the armed forces, they 
warned, is the purpose of the leftist campaign. Resentment is also growing in the 
military over recent leaflets and wall-painting labelling them 'junk dealers'. 

A new crisis has developed in rural areas violently demonstrating the 
backwardness of this country. For the past two months the government has been 
trying to conduct an agriculture and livestock census to aid in economic 
planning. Numerous Indian uprisings have occurred because of rumours that the 
census is a communist scheme to take away the Indians' animals. On several 
occasions there were dead and wounded, as in Azuay Province, for example, 
where a teacher and his brother, who were taking the census, were chopped into 
pieces with machetes and only the arrival of police impeded the burning of what 
remained of their bodies. 

Because priests serving rural areas are often responsible for the rumours, the 
government had to ask the Church hierarchy to instruct all priests and other 
religious to assist in the census wherever possible. In Azuay, nevertheless, the 
census has been suspended. 



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One has to wonder about the strength of religious feeling here. On Good 
Friday two weeks ago tens of thousands of Indians and other utterly poor people 
walked in procession behind images from noon till 6 p.m. — despite heavy rain. 
The same occurred in Guayaquil and other cities. 

Quito 12 May 1962 

Some of our agents are running solid electoral campaigns but others have 
pulled out for lack of support. Both Jose Baquero de la Calle, ex-Minister of 
Labor under Velasco and running as an independent Velasquista, and Juan Yepez 
del Pozo, Sr., General-Secretary of the Ecuadorean affiliate of the International 
Commission of Jurists, J and running for the Popular Revolutionary Liberal 
Party, J declared for Mayor of Quito. When Baquero's candidacy was repudiated 
by the Conservative Party, he resigned, and when Yepez failed to attract 
significant Velasquista backing, he resigned. Oswaldo Chiriboga, J long-time 
penetration of the Velasquista movement, also declared for Mayor but is pulling 
out. For all of these candidates station support was only nominal because their 
possibilities for success were obviously rather limited. 

On the other hand the candidacies of Renato Perez for the Municipal 
Council, Aurelio Davila for the Chamber of Deputies and Carlos Arizaga Vega 
for Deputies are going very well. Alfredo Perez Guerrero, President of the ICJ $ 
affiliate and reform-minded Rector of Central University, is heading the Deputies 
list of the National Democratic Front (Liberals, Socialists and independents) and 
will win without our help. Other candidates of the Social Christian Movement 
and the Conservative Party are being financed indirectly through funds passed to 
Perez and Davila. 

Quito 13 May 1962 

Because Arosemena continues to resist firing extreme leftists in his 
government — penetration in fact continues to grow — Noland recommended, and 
headquarters approved, expansion of the political operations financed through the 
EC ACTOR project. Not only will continued and increased pressure be exerted 
through the regular agents in Quito, Cuenca, Riobamba, Ambato and Tulcan, but 
we have made two new recruitments of important Social Christian leaders in 
Quito. I am in charge of both these new cases. 



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The first new operation is with Carlos Roggiero, J a retired Army captain and 
one of the principal Social Christian representatives on the National Defense 
Front. Roggiero is chief of the Social Christian militant-action squads, including 
the secret bomb-squad, and I have started training him in the use of various 
incendiary, crowd dispersement and harassment devices that I requested from 
TSD in headquarters. Through him we will form perhaps ten squads, of five to 
ten men each, for disrupting meetings and small demonstrations and for general 
street control and intimidation of the Communist Youth, URJE and similar 
groups. 

The other new operation is with Jose Maria Egas, } a young lawyer and also 
a leading Social Christian representative on the National Defense Front. Egas is a 
fast-rising political figure and a really spellbinding orator. Through him I will 
form five squads composed of four to five men each for investigative work 
connected with our Subversive Control Watch List — formerly known as the 
LYNX list. The surveillance team under Lt. Col. Paredes simply hasn't the time to 
do the whole job and is needed on other assignments. With the group under 
Egas's control we will have constant checking on residences and places of work 
so that if the situation continues to deteriorate and a moment of truth arrives, we 
will have up-to-date information for immediate arrests. If Egas's work warrants 
it, we may train him in headquarters and even extend the operation to physical 
surveillance. 

In another effort to improve intelligence collection on the extreme left I have 
arranged to add another telephone tap through Rafael Bucheli J and Alfonso 
Rodriguez. { The new tap will be on the home telephone of Antonio Flores 
Benitez, a retired Army captain and somewhat mysterious associate of Quito PCE 
leader Rafael Echeverria Flores. We have several indications from PCE 
penetration agents Cardenas and Vargas that Flores is a key figure in what seems 
to be an organization being formed by Echeverria outside the PCE structure 
properly speaking. The chances are that Echeverria is developing a group that 
may be the nucleus for future guerrilla action and urban terrorism, but he hasn't 
yet taken any of our agents into it. I will tap Flores for a while to see if anything 
of interest develops — Edgar Camacho will do the transcribing as Francine 
Jacome has only time for transcribing the Araujo line. The LP remains in 
Bucheli's home under the thin cover of an electronics workshop. 

Raymond Ladd, J our hustling administrative officer, has been very active in 
the basketball federation, teaching a course in officiating and helping to coach the 



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local girls teams. Through this work he met Modesto Ponce, J the Postmaster- 
General of Ecuador, who soon insisted that Ladd review in the Embassy all the 
mail we are already getting through the regular intercept. In order to avoid 
suspicion that we are already getting mail from Cuba and the Soviet Bloc, Ladd 
accepted Ponce's offer, and now we get the same correspondence twice. We may 
attempt certain new coverage through Ponce so Ladd has begun giving him 
money for the mail under the normal guise of payment for expenses. 

Quito 21 May 1962 

Arosemena struck back for his humiliation at the hands of the military when 
he was forced to break with Cuba. Last week he fired the Minister of Defense, 
sent the Army Commander to Paris as military attache and sent the Air Force 
Commander to Buenos Aires as military attache. Immediate protests came from 
the Social Christians, Conservatives and others over the removal of these 
staunchly anti-communist officers with new charges of communist penetration of 
the government. 

Then Alfredo Albornoz, J the Minister of Government appointed only seven 
week ago, resigned. Next, all the other National Democratic Front Ministers 
resigned. The issue is Arosemena's refusal to honour his promise of last month, 
when the Front came into the government, to dismiss two key leftist appointees: 
the Secretary- General of the Administration and the Governor of Guayas 
Province. 

Noland is sorry to lose Albornoz because they were developing a worthwhile 
relationship both from the point of view of intelligence collection through 
Albornoz and from action by Albornoz on undesirables within the government. 
Arosemena is searching for new support, but the Front is holding out for the 
resignations. 

But yesterday new ministers were named after Arosemena made another 
promise in secret to fire the Governor of Guayas Province. Today the resignation 
was announced. Although this is a step in the right direction, the Secretary- 
General of the Administration remains (he is like a chief of staff with Cabinet 
rank) along with many others of the same colouring. Among the new ministers is 
Juan Sevilla, J a golfing companion of mine who was named Minister of Labor 
and Social Welfare. Gil Saudade will decide whether Sevilla could be of use in 
his labour operations. 



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Quito 4 June 1962 

Traditional violence flared up in several cities during the final days before 
the elections which were held yesterday. The right was split, as were the centre 
and the Velasquistas — with a profusion of candidates all over the country 
excepting the extreme left which didn't participate. 

The Conservative Party won the most seats in the Chamber of Deputies 
(although not quite a majority), and victories in most of the municipal and 
provincial contests. Aurelio Davila, who managed the Conservative campaign in 
Quito, was elected Deputy for Pichincha. ReRato Perez was elected Quito 
Municipal Councillor from the Social Christian list. And Carlos Arizaga Vega 
was elected Conservative Party Deputy for Azuay Province. 

The Velasquistas have had a disaster, winning only six deputies and two 
mayors' races — one of which was in Ambato. Jorge Gortaire's candidate there, 
backed by the Anti-Communist Front, | was second but Gortaire is being given 
overall credit for the defeat of the Revolutionary Socialist incumbent. 

The elections are a clear indication of the effectiveness of the Conservatives' 
campaign against communist penetration in the government and are a severe 
defeat both for Arosemena and for the National Democratic Front. When 
Congress opens there can be little doubt that the Conservatives will exert new 
and stronger pressure for elimination of extreme-leftists in the government. 

Reinaldo Varea has been taking a severe beating in the continuing 
controversy over the junk swindle. The case is colouring the whole political 
scene and unfortunately for us Varea isn't very effective in what is a very difficult 
defence. In a few days he'll go to Washington for treatment of stomach ulcers at 
Walter Reed Hospital — Davila will be acting Vice-President. 

Quito 15 June 1962 

The International Monetary Fund has just announced another stabilization 
credit to Ecuador of five million dollars over the next twelve months for balance 
of payments relief. The announcement was optimistic and complimentary, noting 
that Ecuador since mid- 1961 has stopped the decline in its foreign exchange 
reserves and obtained equilibrium in its balance of payments. The new standby, 
of course, is conditional on retention of last year's exchange-rate unification, that 
contributed to Velasco's overthrow. 



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Two programmes are getting under way this month as part of a new US 
country-team effort in staving off communist-inspired insurgency One is the 
Civic Action programme of the Ecuadorean military services and the US military 
assistance mission — in fact under way for a couple of years but now being 
expanded and institutionalized. The purpose of Civic Action is to demonstrate 
through community development by uniformed military units that the military is 
on the side of the people so that tendencies of poor people to accept communist 
propaganda and recruitment can be reversed. It's a programme to link the people, 
especially in rural areas, to the government through the military who contribute 
visibly and concretely to the people's welfare. 

The Civic Action programme just announced as the first of its kind in Latin 
America calls for contributions in money and equipment by the US military- 
assistance mission worth 1.5 million dollars plus another 500,000 dollars from 
the AID mission. Projects will include road-construction, irrigation-canals, 
drinking-water systems and public-health facilities, first in Azuay Province to be 
followed by Guayaquil slums and by the Cayambe-Olmedo region north of 
Quito. Widespread publicity will be undertaken to propagandize these projects in 
other areas in order to generate interest and project proposals in these other 
regions. 

In the station, we will work with Major Breslin, J the intelligence advisor of 
the US military mission. He will use the mission personnel who visit and work at 
the projects as a type of scout — keeping their eyes open and reporting indications 
of hostility, level of communist agit-prop activities and general programme 
effectiveness. 

The other new programme is more closely related to regular station 
operations and is Washington's answer to the limitations of current labour 
programmes undertaken through A I D as well as through ORIT and CIA stations. 
The problem is related to the controversy over the ineffectiveness of ORIT but is 
larger — it is essentially how to accelerate expansion of labour-organizing 
activities in Latin America in order to deny workers to labour unions dominated 
by the extreme left and to reverse communist and Castroite penetration. This new 
programme is the result of several years' study and planning and is to be 
channelled through the American Institute for Free Labor Development { 
(AIFLD), founded last year in Washington for training in trade-unionism. 

The reason a new institution was founded was that AID labour programmes 
are limited because of their direct dependence on the US government. They serve 



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poorly for the dirty struggles that characterize labour organizing and 
jurisdictional battles. ORIT programmes are also limited because its affiliates are 
weak or nonexistent in some countries, although expansion is also under way 
through the establishment of a new ORIT school in Mexico. Control is difficult 
and past performance is poor. The CIA station programmes are limited by 
personnel problems, but more so by the limits on the amount of money that can 
be channelled covertly through the stations and through international 
organizations like ORIT and the ICFTU. 

Business leaders are front men on the Board of Directors so that large sums 
of AID money can be channelled to AIFLD and so that the institute will appear to 
have the collaboration of US businesses operating in Latin America. 
Nevertheless, legally, AIFLD is a non-profit, private corporation and financing 
will also be obtained from foundations, businesses and the AFL-CIO. 

The AIFLD is headed by Serafino Romualdi, 10 Division's longtime agent 
who moved in as Executive Director and resigned as the AFL-CIO's Inter- 
American Representative. Among the Directors are people of the stature of 
George Meany, J J. Peter Grace } and Joseph Beirne, J President of the 
Communications Workers of America J (CWA) which is the largest Western 
Hemisphere affiliate of the Post, Telegraph and Telephone Workers International 
J (PTTI). AIFLD, in fact, is modelled on the CWA training school of Front 
Royal, Virginia where Latin American leaders of PTTI affiliates are being 
trained. Day to day control of AIFLD by 10 Division, however, will be through 
Romualdi and William Doherty, } former Inter-American Representative of the 
PTTI and now AIFLD Social Projects Director. Prominent Latin American 
liberals such as Jose Figueres, } former President of Costa Rica and also a 
longtime Agency collaborator, will serve on the Board from time to time. 

The main purpose of AIFLD will be to organize anti-communist labour 
unions in Latin America. However, the ostensible purpose, since union 
organizing is rather sensitive for AID to finance, even indirectly, will be 'adult 
education' and social projects such as workers' housing, credit unions and 
cooperatives. First priority is to establish in all Latin American countries training 
institutes which will take over and expand the courses already being given in 
many countries by AID. Although these training institutes will nominally and 
administratively be controlled by AIFLD in Washington, it is planned that as 
many as possible will be headed by salaried CIA agents with operational control 
exercised by the stations. In most cases, it is hoped, these AIFLD agents will be 



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US citizens with some background in trade-unionism although, as in the case of 
ORIT, foreign nationals may have to be used. The training programmes of the 
local institutes in Latin America will prepare union organizers who, after the 
courses are over, will spend the next nine months doing nothing but organizing 
new unions with their salaries and all expenses paid by the local institute. 
Publicity relating to AIFLD will concentrate on the social projects and 'adult 
education' aspects, keeping the organizing programme discreetly in the 
background. 

This month, in addition to training in Latin American countries, AIFLD is 
beginning a programme of advanced training courses to be given in Washington. 
Spotting and assessment of potential agents for labour operations will be a 
continuing function of the Agency-controlled staff members both in the training 
courses in Latin America and in the Washington courses. Agents already working 
in labour operations can be enrolled in the courses to promote their technical 
capabilities and their prestige. 

In Ecuador, the AIFLD representative from the US who is now setting up the 
training institute — the first course begins in three weeks — is not an agent but was 
sent anyway in order to avoid delays. However, Gil Saudade arranged for 
Ricardo Vazquez Diaz, J the Education Secretary of CEOSL, to be the 
Ecuadorean in charge of the local AIFLD training programmes. Carlos Vallejo 
Baez, J who is connected with the Popular Revolutionary Liberal Party, J will 
also be on the teaching staff. Eventually Saudade will either recruit this first 
AIFLD representative or headquarters will arrange for a cleared agent to be sent. 

These two new programmes, military Civic Action and the AIFLD, are 
without doubt being expanded faster here than in most other Latin American 
countries. Recently I read the report by a special inter-departmental team of 
experts from Washington called the Strategic Analysis Targeting Team (SATT), 
which in months past secretly visited all the Latin American countries. Their 
purpose was to review all US government programmes in each country and to 
determine the gravity of the threat of urban terrorism and guerrilla warfare. We 
prepared a secret annex for the SATT Report, and among their recommendations 
were expansion of the Subversive Control Watch List programme and updating 
of contingency planning in order to continue our operations from a third country 
— in case we lose our Embassy offices. Ecuador, in fact, shared with Bolivia and 
Guatemala the SATT Report's category as the most likely places for early armed 



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insurgency. Emphasis on immediate expansion of Civic Action and labour 
programmes is probably a result of the SATT Report. 

Quito 21 July 1962 

A breakthrough in Guayaquil student operations. The anticommunist forces 
led by Alberto Alarcon have just won the FEUE J elections. They replace 
extreme-leftist officers who are members of URJE. Less than two weeks ago, 
Alarcon was here in Quito for a golf tournament sponsored by Ambassador 
Bernbaum, and he and Noland made final preparations for the FEUE elections. 

Gil Saudade has launched another new operation — an organization of 
business and professional people to promote economic and social reform. Civic 
organizations of this sort have been established by other stations and have been 
effective for propaganda and as funding mechanisms for elections and other 
political-action operations. Our group is called the Center for Economic and 
Social Reform Studies J (CERES) and is headed by two agents, Mario Cabeza de 
Vaca J and Jaime Ponce Yepez. } Cabeza de Vaca formerly was the cutout to 
PCE penetration agent Mario Cardenas but they had a personality clash of sorts 
so John Bacon shifted Cardenas to Miguel Burbano de Lara J who was already 
handling another PCE penetration agent, Luis Vargas. J Bacon then turned 
Cabeza de Vaca over to Saudade to front in the CERES organization. Jaime 
Ponce is the Quito Shell Oil dealer and already a friend of mine and Noland's. 
Noland recruited him to work in CERES and then turned him over to Saudade. 
The Bogota station is helping by sending a delegation from its reform group 
called Center of Studies and Social Action J (CEAS). They are here now. 

Quito 2 August 1962 

Arosemena's back from a state visit to Washington. During his main business 
meeting with Kennedy he was feeling no pain and proved he could name all the 
US Presidents in order from Washington on. He also claimed he couldn't 
remember the Ecuadorean Presidents, there have been so many, for the last half- 
century. Kennedy apparently was amused, but the State Department reports on 
the trip are sombre. 

Thanks to Arosemena the last of the Santo Domingo guerrillas have been 
released. In recent months they've trickled out slowly with little publicity, and 



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unless Davila and others can create an issue during the Congressional session 
opening in a week, the cases will just sink away into the bureaucratic swampland. 
Several of the guerrillas have already gone to Cuba for additional training. 

The telephone tap on Antonio Flores Benitez is producing better information 
right now than any of our PCE penetration agents. Flores has ten or fifteen 
persons who call and say very little, only code -phrases for arranging meetings, 
obviously using code-names. Using the ECJACK surveillance team under Lt. 
Col. Paredes I've been trying to identify Flores's contacts but the work is very 
slow, especially because Flores simply cannot be followed — partly it's the size 
and low proficiency of the team, but, mainly Flores is watching constantly and 
taking diversionary measures. 

Even so, I have identified Rafael Echeverria, Principal PCE leader in Quito, 
as one of the clandestine contacts, along with a non-commissioned officer in the 
Ministry of Defense Communications Section, the chief of the archives section of 
the Presidency and the deputy chief of Arosemena's personal bodyguard. 
Analysis of the transcripts has been most helpful because even though Flores is 
careful when he speaks by telephone, his wife is very garrulous when he's out of 
the house. Several important identifications have been made from her 
carelessness. 

My impression at this point is that Flores, who is not a PCE member, is in 
charge of the intelligence collection branch of an organization Echeverria is 
continuing to form outside the established PCE structure. If he is doing as well in 
the guerrilla and terrorism branch we will have to act soon to suppress the 
organization before armed operations begin. 

In order to speed up transcriptions we have brought in another transcriber. He 
is Rodrigo Rivadeneira, J one of the brothers who run the clandestine printing 
press. Rodrigo is one of Ecuador's best basketball players and was on a 
scholarship in the US obtained for him by Noland. He returned to Ecuador in 
June and because of family financial problems he will probably have to give up 
the scholarship. Francine Jacome will be unable to work for a few months so 
Rodrigo will take over the Araujo line which, while interesting, is not producing 
as much as the Flores line. 

Two police agents have been transferred to new assignments. Pacifico de los 
Reyes, J Chief of Police Intelligence, left yesterday for the FBI course at 
Quantico, Virginia. We got the scholarship for him through the AID Public Safety 
office and he will be gone until the end of the year. Before he left he asked me if 



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I would like to keep up contact with the Police Intelligence unit while he is away. 
He selected Luis Sandoval, J chief technician of the Police Intelligence unit, with 
whom I have been meeting since last year but without de los Reyes's knowledge. 
He introduced Sandoval to me three days ago and somehow we both kept a 
straight face. Before leaving, de los Reyes was promoted from captain to major. 
With the Office of Training in headquarters I am arranging special intelligence 
training for him to follow the FBI course. 

Colonel Oswaldo Lugo, our oldest and most important penetration agent of 
the National Police, has been reassigned from the Cuenca district to the job as 
Chief of the Fourth District with headquarters in Guayaquil. This new job puts 
him in command of all the National Police units on the coast and will be an 
important addition to the Guayaquil base operations. In a few days I will make a 
quick trip to Guayaquil to introduce Lugo to the Base Chief. 

Guerrilla training in Cuba is on headquarters' highest priority list for Latin 
America and instructions have been sent to all stations asking that efforts be 
made to place agents in the groups sent for training. We haven't been able to get 
an agent sent for training yet, but I've been meeting lately with the new Director 
of Immigration, Pablo Maldonado, J who has expressed interest in helping 
impede travel to Cuba by administrative procedures where prior knowledge of 
the travel is available. Maldonado, whom I met through mutual friends, is also 
willing to arrange close searches of Ecuadoreans who return from Cuba. I have 
begun passing on information which comes from the Mexican and Spanish 
liaison services using the immigration documents of travellers to and from Cuba 
through the two main travel points: Mexico City and Madrid. 

Quito 10 August 1962 

Congress opened a new session today and acknowledged that agrarian reform 
is one of the first items on its order of business. In the Senate the National 
Democratic Front is in control while in the Chamber of Deputies the 
Conservative Party has a slight edge when backed by the leftist Concentration of 
Popular Forces' two or three deputies. 

The Conservatives are out to get Varea's } resignation and Noland has no 
way either to stop it or to salvage Varea. Once Varea is thrown out over the junk 
swindle the Conservatives will try to get Arosemena thrown out or force his 



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resignation for physical incapacity. Unfortunately Varea has to go first because 
ousting Arosemena with Varea as Vice-President will be almost impossible. 

Varea continues as President of the Senate and Carlos Arizaga Vega, J our 
ECACTOR political-action agent from Cuenca, was elected Vice-President of the 
Chamber of Deputies. He has quickly replaced Davila as leader of the rightist 
bloc — Davila is concentrating on organizational work and wasn't a candidate in 
the Chamber of Deputies. 

Quito 29 August 1962 

After four days of political crisis, including the resignations of all Cabinet 
ministers, Arosemena finally had to dismiss his leftist Secretary-General. Without 
doubt this is a significant victory for the Conservatives and Social Christians, 
although certain Liberals and Socialists are also aligned in the campaign since 
last year against the key administration leftist. 

The only other Cabinet resignation accepted was that of Manuel Naranjo, } 
Minister of the Treasury and Noland's agent leading the democratic Socialist 
Party. His resignation comes as a result of increasing opposition from 
businessmen to his austerity policies although he is widely and favourably 
recognized for his personal honesty and the beginnings of tax-reform. 

The situation worsens for another of Noland's agents. Two nights ago the 
Chamber of Deputies voted to impeach Varea for his participation in the junk 
swindle — still the supreme issue in current Ecuadorean politics. He's not being 
charged with stealing any of the money, just with negligence and ineptitude. The 
Minister of Defense at the time of the swindle is being prosecuted by the 
Chamber along with the Vice-President. Carlos Arizaga Vega is leading the 
attack. 

Araujo has arrived back in Guayaquil after a trip to China that started late 
last month. At the airport five rolls of training film on street-fighting techniques 
were confiscated as well as propaganda. In China he was received by the Vice- 
Premier — we're going to try and discover if he got other assistance too. 

Quito 3 September 1962 

Labour operations proceed with their usual mixed accomplishments. The 
CROCLE leadership within the CEOSL has insisted in attacking Adalberto 



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Miranda, the Labor Senator from the coast, because of his dealings with the 
Guayaquil Telephone Company. Now they are accusing him of being involved 
with efforts by the United Fruit subsidiary to fire certain employees who are 
members of the subsidiary's trade union which recently affiliated with CROCLE 
and CEOSL. The same Guayaquil CROCLE leaders tried to get Miranda 
disqualified from the Senate but that move failed too. This campaign against 
Miranda is justified in some ways, according to the base, but undesirable right 
now because of its divisive nature. Soon the base plans to terminate the CROCLE 
agents who also insist on retaining the regional identity of CROCLE in 
opposition to our efforts to replace it with coastal provincial federations. When 
that happens, Gil Saudade will move his Quito agents into full control of 
CEOSL; he is now preparing for that development. 

Meanwhile the AIFLD programme is continuing to progress with close 
coordination with CEOSL through Ricardo Vazquez Diaz. Next month Vazquez 
will conduct a seminar for labour leaders from which four will be selected for the 
three-month AIFLD course starting in October in Washington. 

Two weeks ago a PTTI delegation was here to discuss organization and a 
low-cost housing programme with their Ecuadorean affiliate, FENETEL, J which 
is one of the most important unions in CEOSL. The PTTI is training FENETEL 
leaders at their school in Front Royal, Virginia, and the visit was also used to 
create publicity for the AIFLD seminar programme. Included in the delegation 
was the new PTTI Inter- American Representative and a Cuban who is leader of 
the Cuban telephone workers' union in exile. This PTTI organization is without 
doubt the most effective of the International Trade Secretariats currently working 
in Ecuador under direction of 10 Division. 

One has to wonder how the Ecuadorean working class can even stay alive to 
organize. Two weeks ago the President of the National Planning Board, in a 
general economic report to the Chamber of Deputies, revealed that the worker in 
1961 received an average monthly income of only 162 sucres — about seven 
dollars. 

Quito 10 September 1962 

Noland has turned over another branch of the ECACTOR political-action 
project to me. From now on I'll be handling the Ambato operation with Jorge 
Gortaire. 



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Two weeks ago I went with Noland down to Ambato to meet Gortaire and to 
plan a bugging operation that we think may reveal information on Chinese 
support to Araujo, if any. Previously, the manager of the Villa Hilda Hotel in 
Ambato, a Czech emigre, reported to Gortaire that Araujo had made reservations 
for one of the cottages. This will be Araujo's first trip to visit his Ambato 
followers since returning from Communist China and Gortaire suggested that we 
bug the cottage — which he will monitor when Araujo goes there at the end of the 
month. 

Last week-end I returned with the equipment and spent a couple of days with 
Gortaire. He had taken the cottage which Araujo will use and we installed a 
microphone, transmitter and power supply behind the woodwork of the closet 
door. It works perfectly and Gortaire can monitor at ease from his house, which is 
only two blocks from the Villa Hilda. The only problem was that Gortaire forgot 
to lock the door and, when I was standing on a table in the closet making the 
installation, a couple of maids burst in on us. They were clearly puzzled by my 
strange activity, but Gortaire believes they simply could not imagine what I was 
really doing. He will stop by to see the manager from time to time to find out if 
the maids mentioned seeing me on the table. 

Quito 3 October 1962 

Arosemena has survived another attempt at impeachment for incapacity, 
largely because the Conservatives fell apart on the issue, and because Varea is so 
discredited. 

Through my work with Pablo Maldonado, J Director of Immigration, on 
attempting to stop or delay Ecuadoreans from travelling to Cuba and to carefully 
review their baggage on return, I have met the Sub-Secretary of Government, 
Manual Cordova Galarza, } who is Maldonado's immediate superior. 

Cordova expressed willingness to cooperate in trying to cut off travel to 
Cuba, and he said Jaime del Hierro, } the Minister of Government, is also 
anxious to see effective controls established. He added that any time I wish, I can 
call on him or on the Minister to propose new ideas. 

Noland isn't anxious to get involved with Cordova or del Hierro because, 
according to him, Arosemena won't allow them to take really, effective action. He 
said they are probably just trying to appear to be cooperative since serving as 
Minister and Sub- Secretary of public security in this government is beyond 



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redemption. In his view they're like the other Liberals serving Arosemena: 
disgraceful opportunists. For the time being I'll continue with Maldonado and 
avoid contacts with Cordova and del Hierro. 

Today Cordova went to Cuenca to investigate a macabre incident that 
occurred in an Indian village about twenty kilometres outside Cuenca. A medical 
team of the Andean Mission, an organization supported by UN agencies and 
dedicated to teaching social progress and self-help to rural Indians in several 
countries, was making the rounds of villages when they encountered strange 
hostility just outside a community they had already visited several times. They 
stopped the jeep and the doctor and social-worker proceeded on foot leaving the 
nurse and chauffeur in the vehicle. In the village the doctor and the social-worker 
found the Indians assembled in the church for a religious service, but when they 
entered the church they were greeted with extreme hostility by the Indians who 
began to jostle them about. When they did not return for some time the nurse also 
left the jeep and entered the village, but at the church she too was menaced as she 
joined the others. By now the Indians were whipped into a rage by several of 
their leaders who thought the Andean Mission people were communists. As 
matters grew worse the Mission team fled to the sacristy for safety but were 
followed by the Indians who surrounded them and would not let them leave. The 
elderly priest, who had been in the parish thirty-eight years, appeared and the 
team begged him to confirm to the Indians that they were not communists, but 
were simply there to help them. The priest refused to intervene even as the team 
knelt before him begging protection, and he simply blessed them and 
disappeared. The team was then severely beaten — the nurse left for unconscious 
while the doctor and the social-worker were dragged to the street. 

The nurse escaped, returned to the jeep and obtained a police patrol from 
Cuenca. When they returned to the village the doctor and social-worker had been 
killed with stones, clubs and machetes while a local schoolteacher who tried to 
intervene had also been attacked. The Indians, in fact, were about to burn him, 
thinking he was dead, when the nurse and police arrived. 

Preliminary investigation revealed that the priest had earlier instructed the 
Indians to resist the agriculture and livestock census because it was a communist 
plot, and that the priest also spread the story that the Andean Mission team were 
communists. My friends tell me that the priest will probably be sent to a religious 
retirement house as punishment. 



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Arosemena rewarded Manuel Naranjo J by naming him Ecuadorean 
permanent delegate to the UN General Assembly. He has gone to New York and 
Noland has arranged for contact to be established with him by officers from the 
Agency's New York office. We expect that the CIA will try to use him for special 
operations at the UN. 

Quito 7 October 1962 

Brazilian elections are being held today as the climax of one of WH 
Division's largest-ever political-action operations. For most of the year the Rio de 
Janeiro station and its many bases in consulates throughout the country have been 
engaged in a multimillion dollar campaign to finance the election of anti- 
communist candidates in the federal, state and municipal offices being contested. 
Hopefully these candidates will become a counter-force to the leftward trend of 
the Goulart government — increasingly penetrated by the communists and the 
extreme left in general. 

**# 

Noland's transfer back to Washington, expected by him for many months, is 
now official. After five years here he is being replaced in December by Warren L. 
Dean, J currently Deputy Chief of Station in Mexico City. No one here knows 
anything about the new chief except that he's a former FBI man who wants 
Noland to arrange for immediate release of his dogs, that are coming on the same 
flight from Mexico City. 

Quito 15 October 1962 

The Santo Domingo guerrilla adventure has reached a conclusion as far as 
the PCE is concerned. At a Central Committee Plenum just ended Jorge 
Ribadeneira was expelled from the party for his 'divisionist' work in URJE and 
for leading PCE and JCE members into the guerrilla operation. The expulsion 
was in agreement with a resolution of the Pichincha Provincial Committee 
following their investigation in August. Ribadeneira was an alternate member of 
the Central Committee and a full member of the Pichincha Provincial Committee 



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under Rafael Echeverria. Our PCE agents report that the struggle will now turn to 
URJE where the Ribadeneira forces are struggling with the forces controlled by 
the PCE and Pedro Saad. One can only wonder what the Central Committee 
would think of Echeverria' s parallel activities outside the PCE as reports continue 
to reveal preparations by his group for armed action and terrorism. This comes 
through the ECWHEAT telephone tap on Antonio Flores. 

I continue working with my two Quito Social Christian leaders, Carlos 
Roggiero and Jose Maria Egas, in their respective fields of militant action and 
subversive watch-control. Egas has been under rather intense cultivation by the 
chief of the Embassy political section (ostensibly my boss) who doesn't know he 
is my agent. Egas has just left on a State Department leader grant to observe the 
US electoral campaign. He'll spend most of his time in California but after the 
elections he'll return to Washington where headquarters will give him a month of 
intense training in clandestine operations, mainly surveillance and investigations. 

Velasco is again beginning to haunt the political scene and the spectre of his 
return for the 1 964 elections looms not far over the horizon. Through the Agenda 
Orbe Latinoamericano % news service we arranged to have Velasco interviewed 
recently in Buenos Aires, and he affirmed his plans to return in January 1964 for 
the campaign. Publication of the interview here has caused just the ripple we 
want so that the ECACTOR agents will begin plotting to keep him from returning 
or from being a candidate. 

Noland has a new Velasquista agent who began calling on him at the 
Embassy some weeks ago to offer tidbits on organizational work of Velasquista 
leaders in Quito. The new agent is Medadro Toro % and he has Noland extremely 
nervous because of his reputation as a gunman. He was one of the four people 
arrested for firing at Arosemena during the shoot-out in the Congress in October 
last year, and he was jailed from then until February when the Supreme Court 
threw out the case. He was back in jail in April for insulting Arosemena and in 
May he was a Velasquista candidate for Deputy in the June elections. He lost and 
is obviously looking for some way to keep body and soul together. So far his 
information has helped resolve persistent rumours of Velasco's imminent return 
and Noland, although personally fearing this man, thinks he has long-range 
potential. What bothers Noland are Toro's beady eyes looking through him, but 
he'll either have to begin discreet meetings outside the Embassy very soon or 
forget the whole thing. Politically Toro is dynamite. 



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Gil Saudade is trying to salvage his Popular Revolutionary Liberal Party J 
(PLPR), although several of the agents are now firmly entrenched in the CEOSL 
labour organization. After the fall of Velasco the struggle resumed in the PLPR 
between our agents and a group of extreme-leftists who were close to Araujo, 
coming to a head last week with the expulsion of Araujo's friends. Now Gil will 
try to get his agents active again in the organization, again to attract the 
Velasquista left away from Araujo, so that the PLPR will have some influence if 
Velasco returns for the 1964 election campaign. 

Quito 6 November 1962 

At long last Reinaldo Varea's impeachment proceedings, which have 
dominated the political scene since August, have ended. Today he was acquitted 
by the Senate although Velasco's Minister of Defense at the time of the junk 
swindle lost his right to hold public office for two years. Varea may have 
survived as Vice- President but his political usefulness is practically wiped out. 
The only hope is for him to work very hard to rebuild his reputation so that when 
Arosemena's next drunken scandal occurs Varea might not be such an obstruction 
to ousting Arosemena for physical incapacity. Even so, there is little or no 
indication that Varea could ever overcome the Conservative and Social Christian 
opposition to him — he is, after all, a Velasquista. 

Quito 8 November 1962 

Congress's final session last night kept tradition intact. In addition to a 
fistfight involving Davila, the national Budget was adopted. Discussion of the 
Budget only began yesterday and was, of course, shallow and precipitate. There 
is a general agreement that it will be very difficult to finance in spite of new tax 
measures. 

The 1962 Congressional session, as in 1961 and 1960, ended with no 
agrarian, tax or administrative reform. The session was controlled by the 
Conservatives and Social Christians who sought to use the Congress as a political 
forum, with the junk scandal as the issue, to attack both the Arosemena 
administration and the Velasquista movement. Significant legislation was never 
seriously considered. 



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Quito 20 December 1962 

Another crisis — the worst yet — broke today. President Allesandri of Chile 
stopped in Guayaquil this afternoon for an official visit to Arosemena after a trip 
to see Kennedy At the airport Arosemena was so drunk he had to be held up by 
aides on both sides and later at the banquet he had to call on a guest to make the 
welcome toast. 

News of this disgrace has spread around the country like a flash and already 
Carlos Arizaga Vega is moving to gather signatures for convoking a special 
session of Congress to throw Arosemena out. This time Arosemena may well 
have to resign. 

### 

The new Chief of Station arrived with his wife and dogs and next week the 
Nolands leave. Today Jim was given a medal by the Quito Municipal Council in 
recognition of his work with youth and sports groups in Quito. Renato Perez, 
Acting Council President, presided at the ceremony. Tomorrow at the golf-club 
the Nolands will be honoured at a huge party, and the following day Janet and I 
have invited about a hundred friends to a farewell lawn party for the Nolands at 
our house. 

Quito 28 December 1962 

The Nolands left and the new Chief of Station, Warren Dean, J hasn't wasted 
any time letting us know how he works. The other day, even while Noland was 
still here, Ray Ladd and I went off to spend the afternoon with a crowd of 
friends, mostly from the tourism business, at a bar and lounge of questionable 
respectability called the Mirador (it overlooks the whole city). The next day Dean 
gave us a verbal dressing down in a staff meeting and left no doubts he wanted to 
know where everyone is at all times. Afterwards Noland gave me another of his 
friendly advice sessions, warning me that my wilder habits may not sit well with 
Dean and that I'd better be a little more discreet. Frankly I think this new chief is 
pulling the old military shakedown technique — a mild intimidation to establish 



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authority. Surely, with the extra hours worked at night and on week-ends, an 
afternoon taken off now and then is justified. 

This new chief is a big man, about six feet four inches and somewhat 
overweight. He's obviously having difficulty with the altitude even though he has 
come from Mexico City — each afternoon after lunch he sits behind his desk 
fighting to keep his eyes open. So far the main changes he has indicated are 
increased action against the extreme left in collection of information through 
technical operations and new agent recruitments. He also wants me to increase 
my work with Major Pacifico de los Reyes, the former Chief of Police 
Intelligence who has just returned from training at the FBI Academy in Virginia 
and at headquarters, where he was given several weeks training in clandestine 
intelligence operations. He's just been appointed Chief of Criminal Investigations 
for Pichincha but will continue to oversee the intelligence department. 

Jose Maria Egas, the young Social Christian leader, is also back from his 
State Department trip and from our special training programme. Dean also wants 
me to intensify the use of this agent because headquarters is getting frantic that 
serious insurgency may be imminent. Programmes like the Subversive Control 
Watch List are getting increased emphasis and Egas's teams are crucial for this 
effort. From now on I'll pay him the equivalent of 200 dollars a month, which is 
very high by Ecuadorean standards but consistent with Dean's instructions. 

Quito 12 January 1963 

In Guayaquil last week a national convention of URJE voted to expel Jorge 
Ribadeneira and nine other URJE leaders, most of whom were involved in the 
Santo Domingo guerrilla operation. The expulsions reflect PC E control of the 
convention and the specific charge against those expelled was misuse of 40,000 
dollars that Ribadeneira and his group were given by the Cubans for guerrilla 
operations around Quevedo rather than Santo Domingo. 

The best report on the convention was from a new agent of the Guayaquil 
base who is one of the URJE leaders expelled. Although the agent, Enrique 
Medina, } will no longer be reporting on URJE the base will try to ensure that he 
participates in the organization that these former URJE leaders will now form. 

From now on the URJE ceases to be the main danger for insurgency from our 
point of view. The most important leaders have been thrown out and now that the 
PCE is back in control the emphasis will be on organization and work with the 



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masses rather than armed action, not to eliminate, of course, selective agitation 
through bombings and street action. Our main concern now will be to monitor 
any new organization set up by Ribadeneira and the others who were expelled, 
together with improving our penetrations of the Araujo and the Echeverria groups 
in Quito. In a few days the base will bring out an appropriate story in the 
Guayaquil press on the URJE convention and we'll give it replay here in Quito. 
This will be a blow to URJE and to those expelled, since normally they try to 
keep these internal disputes quiet. Ribadeneira couldn't have been more effective 
for our purposes if he had been our agent. 

My year as a director of the YMCA is ending, but now I am going to 
organize a YMCA basketball team. Dean has approved the use of station funds 
for players' salaries so we will be able to attract some of the best in Quito. We'll 
also buy uniforms and bring in shoes from the US by diplomatic pouch. The 
station administrative assistant, Ray Ladd, will coach the team. The advantage to 
the station is to continue widening our range of contacts and potential agents 
through the YMCA, which was only established here a couple of years ago. 

Quito 16 January 1963 

Reorganization of CEOSL is moving ahead although termination of the old 
CROCLE agents by the Guayaquil base required a visit in November by Serafmo 
Romualdi, Executive Director of AIFLD and the long-time AFL-CIO 
representative for Latin America. The struggle between the old CROCLE { and 
COG J agents, who favoured retention of their unions' autonomy within CEOSL, 
and our new agents, who insisted (at our instruction) that CROCLE and COG 
disappear in favour of a new Guayas provincial federation, finally led to the 
expulsion a few days ago of the CROCLE and COG leaders from CEOSL. Those 
expelled included Victor Contreras } who only last April became CEOSL's first 
President. Matias Ulloa Coppiano is now Acting Secretary-General of CEOs L 
and Ricardo Vazquez Diaz is Acting Secretary of Organization. Both are agents 
of Gil Saudade who originally recruited them through his Popular Revolutionary 
Liberal Party. 

Ricardo Vazquez Diaz has been very effective in expanding the AIFLD 
education programme along with Carlos Vallejo Baez. J In recent months, 
courses have been held in Guayaquil and Cuenca as well as Quito. Other courses 



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are being planned for provincial towns in order to strengthen the CEOSL 
organizations there. 

Quito 18 January 1963 

Student election operations through Alberto Alarcon have again been 
successful in Quito. In December the elections for officers of the Quito FEUE 
chapter were so close that both sides claimed fraud and the voting was annulled. 
Today another vote was held and Alarcon's candidate, a moderate, won. The 
national FEUE seat is now in Cuenca where anti-communist forces are also in 
control. 

The Guayaquil base has made several PCE documents public, by having 
Colonel Lugo, Commander of the National Police in the coastal provinces, add 
them to a three-ton haul of propaganda he captured last October. In a few days 
these documents will come to light in the report emerging from a Senate 
commission's investigation of the propaganda. Included is the PCE Central 
Committee resolution expelling Ribadeneira. Dean is determined to create as 
much fear propaganda as possible as part of a new campaign for government 
action against the extreme left. 

Quito 30 January 1963 

Our new station officer under Public Safety cover has arrived and Dean put 
me in charge of handling his contact with the station. His name is John Burke J 
and he's the most eager beaver I've ever met. Seems to think he'll be crawling in 
the attic of the Presidential Palace next week to bug Arosemena's bedroom. His 
problem is that he broke his leg training, and while it mended for the past year 
and a half he took every training course offered by the Technical Services 
Division, for lack of anything else to do. In recent months he has sent to the 
station masses of audio, photo and other technical equipment including about 200 
pounds of car keys — one for every Ford, General Motors and Chrysler model 
built since 1925. Dean finally blew up over this equipment and fired off a cable 
telling headquarters not to send one more piece of technical gear unless he 
specifically asks for it. Poor Burke. He's not off to a very good start, and Dean 
has told me to make him stick exclusively to the AID police work until further 
notice. His first AID project, it seems, will be to take a canoe trip down in the 



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Amazon jungles to survey rural law enforcement capabilities there - not exactly 
clandestine operations but it could get interesting if he runs into any Auca head- 
shr inkers. 

In fact Burke will have plenty to keep him busy in the straight police work. 
Under the Public Safety programme this year AID is giving about one million 
dollars' worth of weapons and equipment to the police: 2000 rifles with a million 
rounds of ammunition, 500 .38 calibre revolvers with half a million rounds, about 
6000 tear-gas grenades, 150 anti-riot shot-guns with 15,000 shells, almost 2000 
gas-masks, 44 mobile radio units and 19 base radio stations, plus laboratory and 
investigations equipment. In addition to training the national police here in 
Ecuador, the Public Safety office is also sending about seventy of them to the 
Inter- American Police Academy J at Fort Davis in the Panama Canal Zone. This 
Academy was founded by our Panama station last year and is intended to be a 
major counter- insurgency facility similar in many ways to the training 
programmes for Latin American military officers under the military aid 
programmes. 

Quito 15 February 1963 

Dean is getting more determined each day to avoid a surprise insurgency 
situation. He wants to increase coverage of two groups in particular and he wants 
me to do most of the work. The two groups, not surprisingly, are those led by 
Araujo and Echeverria. 

We've had a breakthrough in coverage of the Araujo group through the recent 
recruitment of one of his close collaborators, a Velasquista political hack named 
Jaime Jaramillo Romero. J Jaramillo was arrested last month with Araujo and 
two of the expelled PLPR leaders while recruiting in the provinces. Soon after, he 
was a 'walk in' to the Embassy political section, and after being informed by the 
State Department officer who spoke with him we decided to make a discreet 
contact with him using the non-official cover operations officer of the Guayaquil 
base. I arranged for this officer, Julian Zambianco, J to come to Quito and with 
automobiles rented through a support agent, Jose Molestina, J Zambianco called 
on Jaramillo at his home. A meeting followed in Zambianco's car, which I 
recorded in another car from which I was providing a security watch for 
Zambianco. Earlier I had rigged the Zambianco car with a radio transmitter to 
monitor their conversation. Jaramillo's information looks good — including 



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information about an imminent trip by Araujo to Cuba for more money. As Dean 
is a great believer in the polygraph I have requested that an interrogator come as 
soon as possible to test Jaramillo. If he's clean I'll turn him over to a new cutout 
so that we won't have to call Zambianco to Quito for each contact. Telephone 
coverage continues on Araujo but it hasn't produced good information. 

On the other hand telephone coverage of Antonio Flores Benitez — one of 
Echeverria's principal lieutenants — is still providing excellent information. Flores 
is obviously getting very good intelligence from his agents in the Ministry of 
Defense, the Presidential Palace and the police. Our problem is inadequate 
coverage of Echeverria's plans and of his organization for terrorism and guerrilla 
warfare, although we are getting some information from Mario Cardenas, one of 
our PCE penetration agents who is close to Echeverria. On Dean's instruction I 
am studying three new operations for increasing coverage of Echeverria. 

First, we will try to install an audio penetration of the Libreria Nueva 
Cultura, the PCE bookstore in Quito run by Jose Maria Roura, the number two 
PCE leader in Quito and Echeverria's closest associate. The two of them often 
meet at the bookstore, which is a rendezvous for PCE leaders in general and 
consists of a street-front room on the ground floor of an old colonial house in 
downtown Quito. On checking records for the owner of the house I discovered 
that it belongs to a golfing companion of mine, Ernesto Davalos. J Davalos has 
agreed to give me access and security cover during the audio-installation which 
we will make from the room above the bookstore on a Sunday when it is closed. 
For a listening post (LP) I hope to obtain an office in a modern, multi-storey 
building across the street from the bookstore, where we could also photograph 
visitors and monitor the telephone. 

Second, we will try to bug Echeverria's apartment. He lives in a fairly new 
building in downtown Quito but access for the installation will be difficult. On 
the floor beneath his apartment is the Club de Lojanos (the regional club of 
people from Loja), from which we might be able to drill upwards to install the 
microphone and transmitter. This installation would be very slow and difficult, 
especially if we have to do it while Echeverria or his wife are at home, but 
Cardenas believes Echeverria has important meetings at home and probably 
discusses all his activities with his wife, who is a Czech. I am also checking on 
whether I can get an apartment across the street from Echeverria's that would 
serve as listening and observation post for this operation. 



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The third new operation is another technical installation, this time against 
Antonio Flores Benitez. He has recently moved into a modern multi-storey 
apartment-building where we might be able to monitor both his telephone and an 
audio-installation from the same LP. Although there seems to be little chance for 
access to his apartment or to those around it for the installation, an apartment 
above and just to the side of his is coming free in a few weeks. I may take that 
apartment in order to begin monitoring the telephone from there (rather than from 
the LP in Rafael Bucheli's house) and see later whether the audio technicians can 
drill to the side and down or whether we will have to make the bugging by 
surreptitious entry. Already we know that Flores meets many of his contacts in 
his apartment, and he discusses most of his activities with his wife — who gossips 
about them by telephone when he's not at home. 

On the government side Dean also wants me to intensify my work with Pablo 
Maldonado, J the Director of Immigration, and to work into a liaison relationship 
with Manuel Cordova, the Sub-Secretary of Government and with Jaime del 
Hierro, J the Minister of Government. Although I have avoided until now regular 
contact with Cordova and del Hierro (on Noland's instruction last year) picking 
up with them now should not be difficult. The reason, Dean said, is to discover 
and to monitor their willingness to take action on information we give to them. 
Once we determine willingness on the high level, we'll be able to determine more 
accurately what information will bring action when passed through police agents 
such as Pacifico de los Reyes and Oswaldo Lugo. 

With all this technical coverage I'll need some new agents for transcribing, 
photographic work and courier duties — but if they work we'll not be surprised by 
either Araujo or Echeverria. The team for processing the telephone taps will be 
Edgar Camacho and Francine Jacome with Francine as courier. Rodrigo 
Rivadeneira can switch to transcribing the new audio penetration and Francine, 
will serve as courier for receipt of his material as well. I'll have Francine come by 
my house each morning at eight to leave transcripts and pick up any instructions 
for the others. 

One other effort coming up that could be important: I've given money to 
Jorge Gortaire so that he can buy a used Land Rover to make a trip to military 
garrisons in the southern sierra and on the coast. The purpose of this trip is for 
Gortaire to sound out military leaders on all the rumours going around about a 
move against Arosemena while at the same time weighing the predisposition of 
the military leaders to such an action, even if the rumours aren't true. 



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Quito 1 March 1963 

This morning's newspapers give prominent coverage to Mr. McCone's 
testimony to the Senate yesterday in Washington on training for guerrilla warfare 
in Cuba. The Director mentioned Ecuador as one of the countries from which the 
largest number of trainees has been recruited, and he explained how the Cuban 
Embassy in Mexico City tries to conceal travel to Cuba by Issuing the visa on a 
slip of paper with no stamp in the passport. His report follows another 
headquarters' report, issued last month by the State Department, that between 
1000 and 1500 Latin American youths were given guerrilla training in Cuba 
during 1962. 

In commenting on the press reports this morning Dean told me that one of his 
operations in Mexico City was the airport travel-control team. There the 
passports of travellers to Cuba are stamped by the Mexican immigration 
inspectors with 'arrived from Cuba' or 'Departed for Cuba' to make sure the travel 
is reflected in the passports. The station there also photographs all the travellers' 
passports and with large press-type cameras photographs are taken as they 
embark or deplane. Results of the Mexico City travel-control operation are 
combined with other data on travel, mostly from the other important routes to 
Cuba via Madrid or Prague, for machine processing. In order to intensify 
operations with Pablo Maldonado, Dean wants me to pass him copies of the 
monthly machine runs on Ecuadoreans travelling to Cuba. In addition, Mexico 
City is cabling the names and onward travel data to stations throughout the 
hemisphere so that the travellers can be detained or thoroughly searched when 
they arrive home. I'll also pass this type of information to Maldonado and use it 
as an entree to Cordova and del Hierro. 

I tried to get Dean to reveal why he wants me to work with the Minister and 
Sub-Secretary, because usually a Chief of Station handles the high-level liaison 
contacts. He says he wants me to get the experience now because it will help me 
later. He's bitter about Winston Scott, J the Chief of Station in Mexico City. Scott 
has very close relations with both the President, Adolfo Lopez Mateos, } and the 
Minister of Government, Gustavo Diaz Ordaz. J When Scott left the country 
from time to time or went on home leave he made arrangements for 
communications to be kept open with the President and the Minister but would 
never let Dean make personal contact even though he was Acting COS when 
Scott was away. 



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Guayaquil 31 March 1963 

The best part of being a CIA officer is that you never get bored for long. On 
Friday, two days ago, I flew down from Quito to recruit someone I've known for 
about a year and whom the Base Chief, Ralph Seehafer, J wants to use as a 
cutout to one of his PCE penetration agents. The recruitment went fine and 
tomorrow I'll introduce the new agent, Alfredo Villacres, J to Seehafer. 

I came down on a Friday so that I could spend the week-end out of the 
altitude, but mostly because Alfredo and I usually spend Saturday nights making 
the rounds of Guayaquil's sleazy dives. Last night was typical and we left the last 
stop about eight o'clock this morning with Alfredo roaring down the unpaved, 
pot-holed streets of a suburban shanty town, firing his .45 into the air while his 
dilapidated, windowless old jeep station wagon practically shook apart. 

This afternoon he called me at the hotel to advise that we had barely escaped 
involvement in a new Arosemena scandal. It seems that a few minutes after we 
left the 'Cuatro y Media' last night (it had been an early stop and we left about 1 
a.m.) Arosemena and his party arrived. The story is all over town now of how 
Arosemena and his friends began to taunt the waiters — all are homosexuals there 
— finally ordering one of them to put a lampshade on his head. Arosemena took 
out the pistol he always carries and instead of shooting off the lampshade he shot 
the waiter in the head. No one is certain whether the waiter died or is in the 
hospital, but the blame is going to be taken by Arosemena's private secretary, 
Galo Ledesma (known to all as 'Veneno' (poison) Ledesma). Ledesma apparently 
left today for Panama where he's going to wait to see what happens here. Alfredo 
said that if we had' been there when Arosemena and his group arrived we would 
have had to stay since it's a small, one -room place and Arosemena always invites 
everyone to join his group. I can see the Ambassador's face if that had happened 
and my name was included in the story: good-bye Ecuador. 

Guayaquil 2 April 1963 

I was to have returned to Quito on the first flight this morning but a very 
interesting situation suddenly developed yesterday: After introducing Villacres to 
the Base Chief over lunch, Seehafer and I returned to the Consulate and had a 
visit from the chief of the USIS office. He told us that a young man had come 
into the Consulate this morning asking to speak to someone about 'information' 



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and was eventually directed to him. The person said he was a Peruvian and that 
he had information on the revolutionary movement in Peru and on Cuban 
involvement. The us Is chief said the Peruvian was so nervous and distracted that 
he is probably a mental case, but Seehafer asked me to see him if I had nothing 
better to do. We arranged for the us Is chief to give him my hotel-room number 
(the Peruvian was to return to the Consulate in the afternoon), where he would 
call in the evening. 

The Peruvian came around to the hotel and we talked for two or three hours. 
I took copious notes because I know none of the names on the Peruvian scene 
and sent off a cable this morning to Lima and headquarters. The Peruvian is 
Enrique Amaya Quintana J and is a middle-level militant of the Movement of the 
Revolutionary Left (MIR). He has just finished a three months' training course in 
Cuba along with several hundred other MIR members. They are all reinfiltrating 
to Peru right now, overland from Colombia and Ecuador. 

The important aspect of this future agent, if he's telling the truth, is that he 
was selected out of the MIR group to receive special training in communications. 
He showed me a notebook full of accommodation addresses throughout Latin 
America to which secret correspondence will be sent. Moreover, he also showed 
me a dictionary that serves as the key to a code system that he will use in secret 
writing and radio communications with Havana. 

This afternoon we got cables back from both headquarters and Lima 
confirming Amaya's status in the MIR and warning us not to let this one slip 
away. The MIR is the most important potential guerrilla organization in Peru with 
hundreds of people trained in Cuba and with advanced plans for armed 
insurgency. 

Lima sent a list of questions for Amaya which I'll go over with him tonight. 
He really is a case of nerves and won't like working with a tape-recorder but I'm 
going to insist we record everything so that we don't have to depend on my notes. 
This way I can get more out of him too. It's not going to be easy getting him to 
stay with us — what he wants is financial assistance to get his wife and child out 
of Peru and to resettle in some other country. He says he became disillusioned 
during the training in Cuba, but my guess is that he's lost his nerve now that he's 
almost on the battlefield. 



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Quito 5 April 1963 

This MIR case has people jumping all around headquarters it seems. Not just 
the Peruvian and Ecuadorean desks — the Cuban branch and even the Soviet 
Russia Division are also getting into the act. As a cutout and handling officer I 
brought in Julian Zambianco, } and yesterday Wade Thomas } arrived from 
headquarters to take close charge of the case — he's a specialist in CP penetration 
operations. Meanwhile I had sessions each day with Amaya on the tape-recorder, 
summarizing the results in cables to Lima and headquarters. The guy is definitely 
coming clean — everything seems to check out — and yesterday I finally got him 
to agree to spending at least a short period back in Peru with his former friends. 
From the sound of the cables from Lima, Amaya is going to be their first 
important MIR penetration. My participation ended today when I came back to 
Quito. 

Quito 12 April 1963 

A report is just in from Mario Cardenas, one of our best PCE penetration 
agents and a close but not intimate associate of Echeverria. Cardenas reported 
that Jose Maria Roura, Echeverria's principal lieutenant in Quito, has left for 
Communist China where he expects to get payments started that will enable the 
Echeverria group finally to begin armed action. Echeverria has told Cardenas to 
stand by for travel to Colombia at a moment's notice, so that he can receive 
money and documents that Roura, who is very well-known, should not bring into 
the country himself. 

We discussed in the station whether to advise Jaime del Hierro, the Minister 
of Government, or Manuel Cordova, the Sub- Secretary, but for better security 
we decided to post a special watch on Roura's return through Juan Sevilla, | the 
Minister of the Treasury. Sevilla, who has been a golfing companion of mine for 
over a year, jumped at the chance, just as I thought he would, and he assigned his 
personal secretary, Carlos Rendon Chiribaga, J to watch for Roura's return at the 
Quito airport. Now we can only hope that Roura comes straight back to Quito 
with no stop in Colombia so that we're not forced to protect Cardenas. If by 
chance we learn that Roura will arrive in Guayaquil, Sevilla can send his 
secretary there to await Roura. Meanwhile I'm moving along with the audio 
operation against Roura's bookstore and in a couple of days Larry Martin, | the 



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audio technician from the Panama station support unit, will arrive to make the 
installation. 

Besides Roura's trip we are also monitoring for Araujo's return. He is in Cuba 
right now and perhaps he too will bring back money, although the chances are 
slim that either he or Roura will be so careless as to bring back money on their 
persons. So that we can get timely information after his return I've had 
Zambianco come up from Guayaquil again to turn over Jaime Jaramillo } to a 
new cutout, Jorge Andino, J who is a hotel owner and Ecuador's best polo player. 
Andino is another acquaintance from about the time I arrived and he too was 
quite willing to help. He'll receive the reports at the hotel but pass them to me at 
another business he owns a couple of blocks away. One of the mysteries we're 
trying to solve right now is whether there is any close relationship between 
Araujo's group and Echeverria's group, because Echeverria has given several 
indications that he is in contact with the Cubans. 

Medardo Toro, J the Velasquista gunman whom Noland picked up in a 
developmental status last year, is now reporting on a regular basis. Dean told me 
to get him into the groove so I brought Zambianco into the case in an 
arrangement similar to the one we used with Jaime Jaramillo two months ago. 
Until I get a good cutout for Toro we'll have to keep it going with Zambianco, but 
this way it's very secure. Mainly we want to keep abreast of Velasco's plans to 
return for next year's elections. Too bad Toro is so far from Araujo's group. 

Quito 14 April 1963 

Each day, it seems, a new wave of rumours spreads around the country 
signalling the imminent outbreak of guerrilla warfare and terrorism. Partly the 
rumours reflect our continuing propaganda campaign to focus attention on 
communism in order to provoke a serious crackdown by the government. But 
partly the tension is based on real cases such as captures of propaganda by 
Colonel Lugo's police in Guayaquil and the recent near-death of a terrorist when 
a bomb exploded during a training session. Our worry is that the Ecuadorean 
police and military wouldn't be able to cope with a determined guerrilla 
movement. 

A recent incident underlines our doubts. Two nights ago a Navy logistics ship 
was returning from the Galapagos Islands with a group of university students 
who had been in the islands on an excursion. A coastal Navy patrol was lurking 



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in the darkness just off-shore in wait for an expected incursion by a contraband 
vessel. The coastal patrol mistook the logistics ship for the contraband vessel and 
a two-hour gun battle between the two Navy ships followed. The coastal patrol 
finally called by radio to Guayaquil for help and the Navy communications 
centre called off the battle. What was worse was that their firing was so bad that 
no serious hits were made during the two-hour battle and only one sailor was 
wounded. After arriving in Guayaquil the students spread the story, which was 
published in Guayaquil today, but the Navy isn't talking. 

When Dean heard this story this morning he told me to get moving faster on 
the new technical operations — he said headquarters will get all over us if we get 
surprised by Araujo, Echeverria or others, what with the guerrilla movements 
already under way in Peru, Venezuela and Guatemala, and Brazil steadily going 
down the drain under Goulart. Here the only encouraging sign of late has been 
increasing willingness by the Minister of Government and Sub- Secretary to 
increase general travel-control efforts and to allow police action such as Colonel 
Lugo's recent operations. However, del Hierro and Cordova are clearly being 
restrained by Arosemena from really effective action. 

Quito 19 April 1963 

Another important trip to wonder about — this time it's Antonio Flores 
Benitez, one of Echeverria's lieutenants, who left today for Cuba. What we can't 
figure out is why Echeverria would send Flores to Cuba when Araujo is there and 
Roura is in China. Roura's trip to China, according to Cardenas, was made 
without the authorization of the PCE Executive Committee in Guayaquil and if 
Pedro Saad finds out there will be serious trouble for Roura, a member of the 
PCE Central Committee, and possibly for Echeverria. No doubt now that 
Echeverria is moving ahead fast with his organization outside the party. 

Flores was very careful not to mention his trip by telephone, but his wife let 
it slip out a couple of days ago. We're monitoring the telephone now from the 
apartment above and to the side of Flores's. Rodrigo Rivadeneira J moved into 
the apartment with his brother Ramiro J and his mother, and between him and 
Ramiro the transcriptions are kept right up to date. The connection was easy 
because the building is completely wired for telephones and Rafael Bucheli J and 
an assistant simply made the connections in the main terminal box in the 
basement of the building. While Flores is away we'll try to get going on the audio 



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operation although the audio technician isn't enthusiastic about drilling through 
reinforced concrete at such a difficult angle. 

I also decided to use Rodrigo Rivadeneira in the listening and observation 
post for the technical operation against the PCE bookstore. On Sunday Larry 
Martin and I made the installation from the room above with Ernesto Davalos J 
giving us security and cover. Davalos was very nervous because his caretaker is a 
communist and spends most of the time in the bookstore. Although I assured him 
that we would be very quiet, Martin decided to make the installation behind the 
baseboards and underneath several of the floorboards. The noise when we ripped 
them up was so screeching, what with their centuries-old spikes, that Davalos 
almost had a coronary. The same thing happened when we hammered the boards 
back into place but luckily the caretaker showed no signs of suspicion — at least 
according to Davalos. The audio quality is good (Echeverria is running the 
bookstore while Roura is in China) although street noise at times drowns the 
conversations. 

Rivadeneira rented the office across the street as an LP and he sits in a false 
closet I had built by Fred Parker, J a US citizen support agent who has a furniture 
factory in Quito. Parker built the closet so that it could be carried in by pieces, 
and Rivadeneira sits in it looking through a masked side, listening, recording, 
snapping pictures of visitors to the bookstore, and keeping a log. 

I had good luck also in getting just the right apartment across the street from 
and slightly above Echeverria's apartment. This observation and listening post 
(OP-LP) has just been rented through Luis Sandoval, the chief technician of 
police intelligence, who accepted my offer to work with us full-time for the 
foreseeable future. Sandoval is resigning from the police and will open a cover 
commercial photography studio in the OP-LP. I've given him enough equipment 
to start — more is coming later — and he will do the developing and printing of the 
photographs taken by Rivadeneira at the bookstore. As soon as we have a chance, 
we'll get Larry Martin back and try for the audio installation against Echeverria's 
apartment — probably by drilling up from the Loja Club that occupies the entire 
floor underneath Echeverria's place. 

Quito 24 April 1963 

A sensational case that may be our first real breakthrough has just developed, 
but it looks as though interference from Arosemena may hamper follow-up. A 



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few days ago, the Guayaquil base received information from one of its 
penetration agents that a Cuban woman was training URJE members there. The 
base passed the information to Colonel Lugo who managed to arrest her. Her 
name is July da Cordova Reyes, at least that's what her documentation says, and 
we may well have here the first case of the Cubans sending out training missions 
to work in Latin American countries where they don't have diplomatic missions 
— certainly it's the first case of its kind in Ecuador. 

Colonel Lugo, however, reported that after her arrest he was ordered not to 
conduct an extensive interrogation. I took up the matter with Jaime del Hierro, 
the Minister of Government, in order to emphasize the great importance of this 
case for discovering the extent of Cuban involvement, especially whether there 
are other Cubans here besides the woman and all the details about when she 
arrived, whom she trained, where and whom she has trained before, her 
intelligence service in Cuba, communications, and much more. We are prepared, 
I told the Minister, to bring down an expert from Washington who could assist in 
the interrogation but who would not be recognizable as an American. All I got 
from the Minister was evasion, and we've concluded that Arosemena gave the 
order not to exploit the case. Two days ago the Governor of Guayas ordered her 
expulsion from the country: we're trying to salvage the case but right now we're 
not hopeful. 

The extreme left has been forced into the dubious position of supporting the 
very government that broke with Cuba. Arosemena certainly isn't fooling the 
extreme left, or anyone else for that matter, on how hard he must fight for 
political support. Two days ago he cancelled a provision of last November's 
Budget Law prohibiting any government salaries higher than the President's. The 
purpose of the law was to limit the very high salaries and benefits being received 
by the heads of certain autonomous government agencies and by other officials 
who hold more than one government job. Some, for example, were making the 
equivalent of 1 000 dollars per month — twice as much as Arosemena. Obviously 
he cancelled the law in order to glue on a little more firmly his Liberal Party 
supporters and others who had been hurt by the salary limitation bill. Disgusting 
for a desperately poor banana republic where over half the population receives 
less than 1 00 dollars per year. 



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Quito 1 May 1963 

Some success on the da Cordova case. On 27 April she was deported to 
Mexico but was refused entry and returned to Guayaquil. Colonel Lugo can't 
proceed with interrogation until he gets the go-ahead from the ministry, so I'll 
bring up the case again with del Hierro or Manuel Cordova. Warren Dean is 
happy — he told me very confidentially that Gustavo Diaz Ordaz, the Mexican 
Minister of Government, is really in the Chief of Station's pocket and that's 
where I ought to try and get del Hierro. The way to do it, according to Dean, is to 
provide money for a high government official's mistress-keeping: the caso chico 
rent, food, clothing, entertainment. In Mexico, he said, the Chief of Station got an 
automobile for the Minister of Government's girlfriend. The Mexican President, 
with whom the COS also works closely, found out about the car and demanded 
one for his girlfriend too. That must be an interesting station. 

*** 

Gil Saudade has made some progress in labour operations. Last month a 
provincial trade-union federation for Guayas (FETLIG) J was established as the 
CEOSL affiliate there, replacing CROCLE. This was a long-sought after 
development and perhaps will now end the dissension that has wracked CEOSL 
for so long. The AIFLD courses, largely the work of our agents, Ricardo Vazquez 
Diaz and Carlos Vallejo Baez, continue to expand. Vazquez was recently 
confirmed as permanent CEOSL Organization Secretary and Matias Ulloa 
Coppiano was confirmed as permanent Secretary-General. They had been acting 
in these jobs since the expulsions in January of the old CROCLE agents. 

Today only the CTE and the Catholic CEDOC were in the streets to celebrate 
Labour Day. Instead of a parade, which would have turned out very few people, 
the CEOSL group were invited by our Ambassador to a reception at his residence 
which was highlighted with entertainment by Matias Ulloa. J 

Quito 11 May 1963 

Today a sensational new case has solved at least some of the recent bombings 
and kept the city in a commotion all day. It started just after midnight this 



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morning when four terrorists (two from URJE) hailed a taxi, overpowered and 
drugged the driver, tied him up and placed him in the trunk. The terrorists then 
drove around town passing various embassies where they intended to throw the 
bombs they were carrying — along with a quantity of weapons and ammunition. 
Because of recently increased police protection at the embassies, however, they 
decided against the bombings. Just after dawn the driver regained consciousness 
and after slipping out of his ropes managed to open the trunk of the taxi. The 
terrorists saw him escaping but he got away and went for the police. 

Major Pacifico de los Reyes took charge of the case. The terrorists panicked 
and drove to the edge of town where they tried to escape on foot up the volcano 
that rises on one side of Quito. The manhunt during the day caused widespread 
alarm and exaggerated fears in Quito but eventually the terrorists were captured. 
They have already confessed to various recent bombings and armed robberies, 
through which they were raising funds to finance guerrilla operations. Most 
sensational of all, however, is that their leader is Jorge Ribadeneira of Santo 
Domingo guerrilla fame and another member is Claudio Adiego Francia, the 
Argentine who was arrested in 1961 for training URJE members. 

We didn't know about this new Rivadeneira group, and I've told de los Reyes 
to try to determine if there is any connection between them and the Echeverria 
group. 

Quito 17 May 1963 

Major de los Reyes has arrested Francia but Ribadeneira is still in hiding. He 
has also arrested Echeverria and Carlos Rodriguez, Echeverria's chief lieutenant 
for Indian affairs, but they protested their innocence and he had to let them go. 
Propaganda play on the case is sensational, with photographs of the weapons and 
ammunition spread all across the newspapers. Dean wants to press ahead with 
propaganda exploitation of every possible case: Layedra, da Cordova, this one — 
also the current trips of Araujo, Roura and Flores. Somehow Arosemena has got 
to be forced into taking repressive action. 

It's too soon to be sure but perhaps a change of policy is already under way. 
Today Pablo Maldonado's Immigration Service denied passports to ten young 
Ecuadoreans who have scholarships to 'study' in Cuba. I've given Maldonado this 
type of information before but this is the first time he has taken strong action and 
it may work. The students asked for passports saying they were only going to 



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Mexico (where they would arrange visas and onward travel). The protests have 
already started and we shall see how long del Hierro, Maldonado's superior, takes 
to weaken. 

Quito 19 May 1963 

Roura's hooked! Juan Sevilla, J Minister of the Treasury, called me this 
morning to advise that Roura arrived at the airport and was discovered to be 
carrying 25,000 dollars in cash. Carlos Rendon, Sevilla's personal secretary, was 
at the airport and made the body search, and right now Roura is being held 
incommunicado by the police with the money impounded. I suggested to Sevilla 
that he add to the sensation of the case by starting a story that Roura was also 
carrying false documents, compromising papers and other similar material. This 
is going to be a big one. 

*** 

Jorge Gortaire J was back here in Quito a couple of days ago. He has 
finished his trip to the military garrisons in the south and on the coast — making 
several long delays through breakdowns. He's going to write up a complete report 
back in Ambato, but he said there is very considerable disgust with Arosemena in 
the military commands. If it weren't for Reinaldo Varea, in fact, there would be 
nothing to keep the military leaders, once they got organized, from forcing 
Arosemena's resignation. For now they see nothing to do because they still 
favour constitutional succession. Varea is still the fly in the ointment, because the 
junk swindle led to so much ridicule of the military. All the officers with whom 
Gortaire spoke seriously are concerned about communist infiltration in the 
government and preparations for armed action, but something more serious will 
have to happen before they begin to move against Arosemena. So we must keep 
up the pressure, exploiting every case to the maximum through propaganda 
media and political-action agents. On Varea, Dean is considering whether or not 
to ask him to resign, with encouragement in the form of a generous termination 
bonus, but he hasn't decided. 



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Quito 21 May 1963 

The Roura case is headlines — supersensational! Everyone in the country is 
talking about it. Jaime del Hierro has taken charge and is keeping up the 
suggestions about 'compromising documents'. He told the press that Roura's 
documents are more important than the money and relate to recent reports from 
the US that Che Guevara is leading guerrilla-warfare planning for several South 
American countries including Ecuador. The documents are also said to include a 
'secret plan' for guerrilla warfare and terrorism in Ecuador. 

Last night del Hierro asked me if I could get someone in Washington to 
determine whether the bills are counterfeit because the Central Bank experts here 
believe they're real. I suppose he and his friends, want to keep the money, so I 
cabled headquarters to see what can be done. 

Del Hierro's action puzzles me somewhat because of his sudden enthusiasm. 
Perhaps Sevilla is pushing him hard because he was responsible for the arrest, yet 
del Hierro still refuses to give the go-ahead on interrogation of the Cuban, July 
da Cordova Reyes. 

Quito 23 May 1963 

Del Hierro is getting worried because the press and others keep urging him 
for the compromising Roura documents. There aren't any, of course, and now 
Roura's lawyers are beginning to move. Nevertheless both del Hierro and Sevilla 
are keeping the publicity going by calling the Roura case an example of the 
importation of foreign ideology to enslave the country. Del Hierro is also citing 
the case of the ten students who were refused passports as another example of 
falsification of documents for travel to Cuba for guerrilla-warfare training. 
Yesterday Sevilla's secretary, who made the airport arrest, said in a press 
statement that the Roura documents include instructions on how to organize a 
Marxist revolution, how to intensify hatred between classes, and how to organize 
campesinos and salaried agricultural workers. 

Yesterday del Hierro ordered the arrest in Guayaquil of the local 
correspondent of the New China News Agency, whose press carnet was in 
Roura's pocket when he arrived. The correspondent only returned from Europe a 
few days ago, and his trip must have been related to Roura's. 



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Roura's defence began yesterday with publication of a statement that shows 
he is worried about repercussions from Sa ad and the PCE leadership in 
Guayaquil. He defended having the money, saying that he had been invited to 
London by Gouzi Shudian (International Bookstore of Peking) and that his trip 
was sudden and without authorization of the PCE. Because of recent 
confiscations by the government of material purchased for sale in his bookstore, 
Roura said, he had obtained 25,000 dollars for a printing shop to reproduce the 
materials provided by Gouzi Shudian. From London he went to Peking, he said, 
and he denounced the confiscation of his notes on visits to communes and other 
sites. 

No doubt Roura will end up in terrible trouble with the PCE — possibly even 
expulsion like Ribadeneira. More important, his arrest will drive the wedge 
deeper between the Saad and the Echeverria groups. What a ridiculous cover 
story. 

Quito 24 May 1963 

Roura has had a bad day all around. He made his formal declaration to the 
court alleging that he discussed the new printing facility in Peking with one Chan 
Kung Wen. The money, however, was given to him, so he said, in Berne on his 
return by someone named Po I Fo. We're checking these unlikely names with 
headquarters — Roura's imagination knows no bounds. 

Roura's lawyer also had a session before the Council of State (the highest 
body for appeal against government violation of personal liberties) which refused 
Roura's plea for liberty and took under advisement Roura's charges against 
Sevilla and del Hierro for violating the Constitution. Now he'll have to stand trial 
on the basis of the 'documents' and the money. We'll have plenty of time to 
fabricate appropriate documents for del Hierro to use against Roura but first 
we're working on something else. 

John Bacon, the Station Reports Officer, and I suggested to Dean that we 
prepare an incriminating document to be used against Antonio Flores Benitez — to 
be planted on Flores when he arrives at the airport. There's a chance, of course, 
that he'll come overland from Colombia or that he'll arrive in Guayaquil, but 
Dean likes the plan and asked us to go ahead. The document will appear to be 
Flores's and Echeverria's own report to the Cubans on the status of their 
organization and on their plans for armed action. We are describing what we 



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know about the organization, filling in with imagination where necessary, on the 
basis of the information from the ECWHEAT telephone tap and reports from 
Cardenas and Vargas, our two best penetrations of the Echeverria group. We are 
emphasizing (for propaganda afterwards) Flores's penetration agents in the 
Ministry of Defense, Army communications, the presidential bodyguard and the 
presidential archives. We are also planning to mention relations with Araujo's 
group and Gonzalo Sono Mogro, who seems to be training a separate 
organization in explosives and weapons. 

Quito 26 May 1963 

It has been a busy week-end. Bacon and I finished the 'Flores Report' 
yesterday and he took it out to Mike Burbano J to put in final form, correct 
Spanish and proper commie jargon. He knows this usage best because he's the 
cutout for Cardenas and Vargas. No question but that we've got a really 
sensational and damaging document. 

Bacon included in the report a general analysis of the Ecuadorean political 
scene with appropriate contempt for the Saad PCE leadership for its 'reformist' 
tendencies. He infers that the Echeverria group has already received funds from 
Cuba and that this report is the justification for new funds. The date for 
commencing an all-out terrorism campaign will be late July (since we already 
have a report that the CTE plans to announce a general strike for that date). 
Bombing targets and guerrilla attacks will be set for the homes of police and 
military officers as well as key installations such as the water-works and the 
telephone and electric companies. 

Burbano passed it back and I typed it this morning — it filled five sheets of 
flimsy blue copy paper. Then Dean came to the office and we agreed that Juan 
Sevilla, the Minister of the Treasury, would be better for getting it planted than 
Jaime del Hierro, the Minister of Government. I went to see Sevilla; he agreed 
immediately and said he'll use Carlos Rendon, the same secretary and customs 
inspector who nailed Roura. When I got back to the Embassy Dean was acting 
like a little boy. He had gone over to the 'Favorita' to buy a tube of toothpaste and 
had spent three hours squeezing out the paste and cleaning the tube. Then he 
crumpled the papers, ground them a little with his shoe, folded them to fit into 
the tube and pronounced the report genuine beyond doubt. I took the tube, now 
with the report neatly stuffed inside, back over to Sevilla and tomorrow he will 



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give it to Rendon who will plant it if possible. Rendon won't move from the 
airport until Flores arrives, and if he comes via Colombia or Guayaquil, we'll 
figure out some other way to get the document out. One way or another this one 
should really provoke a reaction. 

Quito 29 May 1963 

Yesterday still another sensation broke when Araujo arrived back from his 
trip to Cuba. Too bad we didn't have a document prepared for him but he did just 
what we wanted. Sevilla's customs people, whom I had advised through Sevilla 
of Araujo's imminent return, tried a body search but Araujo provoked such a 
scandal that he was taken to the central immigration offices for the search. He 
only had forty-one dollars, however, and was later released — but his screams at 
the airport that revolution will occur very soon in Ecuador were prominently 
carried in this morning's newspapers. 

Other propaganda is coming out nicely. The Council of State meeting on the 
Roura case was in the headlines, featuring Sevilla's very effective condemnation 
of communism and Cuba in defence of his action against Roura. The case of 
Guillermo Layedra, who blew his hand off training URJE members to make 
bombs, is in the courts, and Jorge Ribadeneira's latest caper is still causing 
sensation. Still, we haven't been able to get an interrogation of the Cuban woman. 

Quito 31 May 1963 

First try at the Echeverria bugging was a near disaster. The audio technicians, 
Larry Martin } and an assistant, came back from Panama during the week and I 
worked out an elaborate plan for security and cover. Gil Saudade brought up 
from Loja one of his agents who works in Catholic student activities there, 
Cristobal Mogrovejo, } who is the only agent we have who could easily rent the 
Loja Club which occupies the floor underneath Echeverria's apartment. I brought 
up Julian Zambianco from Guayaquil to be team leader and to direct Mogrovejo 
as the shield for cover. Luis Sandoval and I were in the OP-LP across the street 
observing and communicating with Zambianco via walkie-talkie. I also arranged 
for two getaway vehicles through Pepe Molestina. J 

Mogrovejo earlier this week arranged to rent the entire club for this 
afternoon, a Friday, and to have an option to rent it for the rest of the week-end if 



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his 'business conversations' with the foreigners required additional meetings. 
From observation we knew which room Echeverria uses as a study and we 
selected the proper spot beneath from which to drill up. 

The team entered the club about ten o'clock this morning and Martin and his 
assistant began quietly drilling, slowly and by hand in order not to arouse 
Echeverria or his wife who were coming and going. About four o'clock this 
afternoon the club manager burst in with about a dozen flower-hatted ladies to 
whom, he said, he wanted to show the club. Mogrovejo protested that he had 
been promised absolute privacy but because of the insistence of the club manager 
and the ladies, Zambianco had to intervene to keep them from proceeding to the 
room where the drilling was going on. The incident produced enough suspicion 
in the club manager and enough panic in Mogrovejo to warrant calling the 
operation off for now. I radioed to Zambianco to have the technicians fill in their 
holes with plaster and to paint over. This only took a few moments and shortly 
the team had evacuated the building. 

For the time being we'll let this one cool off while I try to discover another 
way to get access to the Loja Club. Mogrovejo was a bad choice. We won't forget 
it because Echeverria, according to Cardenas, has given several indications that 
he has some kind of communications with Cuba — possibly, one would suppose, 
with a secret writing and radio link. A photo technician from Panama was 
recently here and he said that TSD has large lenses that could be used to 'see 
through' the curtains Echeverria sometimes draws in front of the table where he 
works so that readable photographs of documents on the table might be 
obtainable. This would be one way to read his communications. 

Quito 2 June 1963 

Flores is hooked and we've got another big case! Juan Sevilla and I were 
playing golf together this morning when a caddy came running out to call him to 
the telephone. We rushed into the clubhouse and sure enough it was Carlos 
Rendon, his personal secretary, calling to say that Flores had arrived and that the 
plant had worked perfectly. Sevilla rushed straight to the airport and I went home 
to wait. Late in the afternoon he telephoned and when I went to his house he 
explained that Rendon had seen Flores arrive and had put the toothpaste tube up 
his sleeve. He let it fall out carefully while he was reviewing Flores's luggage, 



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'found it' and began to examine it, finally opening it and' discovering' the 
concealed report. 

Arriving with Flores was another well-known communist, Hugo Noboa, who 
was discovered to be carrying 1,400 dollars in cash in a secret pocket. This 
money, propaganda material, and phonograph records of revolutionary songs 
were confiscated along with the Flores report, and both Flores and Noboa were 
taken under arrest to the political security offices for questioning. 

Now to get the publicity going. 

Quito 3 June 1963 

We're going to have to fight for this one. Only a small notice appeared in the 
press today on the Flores and Noboa arrests, and the only reference to the 'Flores 
Report' was an allegation that microfilm had been found in his suitcase. Flores, 
according to this notice, is protesting that if any microfilm was found it was 
planted either in San Juan, Puerto Rico, where he was in transit, or here in Quito. 

I checked with Juan Sevilla and he told me that he thinks Arosemena is going 
to try to quash the whole case including the false document. This is why, 
according to Sevilla, Flores is still in custody of the political security office 
instead of the police investigations department under Major Pacifico de los 
Reyes. He added that the key figure is Jaime del Hierro, the Minister of 
Government and added that if I know del Hierro, I should confirm the importance 
of Flores and the document. (Neither Sevilla nor del Hierro knows that I am in a 
working relationship with the other.) 

For most of the afternoon I've tried to get either del Hierro or Manuel 
Cordova, the Sub-Secretary of Government, by telephone. It's not like them to 
avoid me like this, and Dean is about to blow up because the report hasn't been 
surfaced. 

Quito 4 June 1963 

There's no doubt now that Arosemena has tried to cover up the case and 
protect Flores, but we're prying it loose almost by the hour. Sevilla threatened to 
resign if the case were suppressed and the rumours of a new Cabinet crisis were 
so strong yesterday and today that the Secretary-General of the Administration 
made a public denial of the crisis. 



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Del Hierro finally called me back today, and when we met at Cordova's 
house he gave me the 'Flores Report' asking that I check it for authenticity 
because it is so grave. I couldn't simply give it a moment's look and pronounce it 
genuine so I took it back to the station. When I told Dean of this he went into a 
fury, stamped up and down and said I'd better get that report surfaced or else. 
He's really disgusted with del Hierro, whom he thinks is trying to delay making it 
public in order to protect the Liberal Party from embarrassment; the document, 
after all, is pretty damaging to the government, even though it is primarily aimed 
at exposing the Echeverria group. 

A positive sign is that Flores has been passed from the political security 
office to the police, which places him directly under del Hierro. In his declaration 
Flores only said that he had been in Europe on a forty-five-day trip as a journalist 
(he writes for the leftist weekly La Mariana) with no mention of travel to Cuba. 

Quito 5 June 1963 

Dean's fit of temper shows no signs of diminishing. This morning he 
demanded Jaime del Hierro's private telephone number at the ministry, which I 
gave him. He called del Hierro and told him angrily that of course the document 
is authentic and that every Ecuadorean should read it. Dean was careful to record 
this call on his dictaphone just in case del Hierro complains to the Ambassador. 

Then I proposed to Dean that I give a copy of the document to Jorge 
Rivadeneira Araujo, the brother of Rodrigo Rivadeneira — the transcriber of the 
Flores telephone tap. Jorge has long participated in the clandestine printing 
operation, along with his brothers, and is a writer for El Comercio, Quito's 
leading daily. We don't usually place propaganda through Jorge, but Dean agreed 
since it is the fastest way to put pressure on del Hierro to release the original 
document. Later I took a copy to Rodrigo which he is passing to Jorge who will 
show it to his editors at the newspaper. This may destroy my relationship with del 
Hierro and Cordova but Dean doesn't care — he doesn't think Arosemena and the 
Liberals can last much longer anyway. 

Quito 6 June 1963 

Our ploy against del Hierro worked liked a charm. This morning about ten 
o'clock Cordova called me from the Embassy receptionist's desk and when I went 



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down he took me out back to del Hierro who was waiting in his car. He said he 
urgently needed back the Flores document because the press had somehow got a 
copy and he would have to release the original later today I rushed up for the 
document, returned it to del Hierro and told Dean who whooped for joy Then I 
called Rodrigo Rivadeneira to alert his brother Jorge that the Ministry of 
Government would release the document later today It may not be printed in 
today's evening newspapers but already the whole town is buzzing about it. 

Today the Council of State formally rejected Roura's case against del Hierro 
and Sevilla, which wasn't unexpected. Roura will be on ice for a long time and 
now Flores's chances of getting off are nil. Tomorrow, Sevilla's formal statement 
to the Council of State will be published in the newspapers — a full page which 
we're paying for and which includes PCE data like membership figures and 
recruitment priorities that I passed to Sevilla for documentation. 

Both Mario Cardenas and Luis Vargas report that Echeverria has been 
crushed psychologically by this blow. He fears that with the Roura arrest and 
now Flores he'll surely be reprimanded by the Saad leadership, possibly even 
expelled from the PCE. He has now gone into hiding and the agents are trying to 
find out where. 

Quito 7 June 1963 

Finally it's in print and the sensation is immense. Everything's included: 
description of Saad and the PCE Guayaquil leadership as 'old bureaucrats full of 
bourgeois vices, faithful to the Moscow line and acting as a brake on revolution'. 
Also: 'We (the Echeverria group) are faithful to the experiences of the Cuban 
revolution and the necessity to prepare for armed insurrection'. Araujo is 
described as having a good number of trained and armed teams and the 
Ribadeneira group is cited as possibly useful for 'our' purposes. All the different 
critical government offices where Flores has his contacts are mentioned — 
including the Presidential Palace — and the date for commencing operations 
(urban terrorism and rural guerrillas) is given as late July to coincide with 'our' 
urging of the CTE to call a general strike for that time. 

As if this document weren't enough in itself, by sheer coincidence the CTE 
yesterday announced a general strike for late July. Our agents had reported that 
this announcement would come some time and we had included it in the Flores 
document. This announcement was carried in the press today, alongside the 



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Flores document, as proof that the latter is genuine. Moreover, Sevilla's statement 
to the Council of State also came out this morning. 

Quito 15 June 1963 

Several pieces of good news. First, I've just received my second promotion 
since coming to Quito, to GS-11 which is about equivalent to captain in the 
military service. The other is that I'm being transferred to Montevideo, Uruguay, 
at the end of the year — this I learned informally in a letter from Noland the other 
day. I had asked to be transferred to Guayaquil as Base Chief if the job became 
vacant, but the Montevideo assignment is good news because we'll be near the 
seashore again. These mountains are getting oppressive lately, and besides, 
Noland says Montevideo is a great place to live with good operations going. 

Meetings between Zambianco and Medardo Toro, J the Velasquista gunman, 
have been fruitful but Dean is getting nervous about collecting timely 
intelligence on Velasco's plans to return for next year's elections. Through 
Zambianco I have worked out a plan to send Toro to Buenos Aires under cover of 
medical treatment for a back injury that has needed special attention for some 
years. Toro will take the treatment in Montevideo but will contact Velasco in 
Buenos Aires and stay as close to him as possible. Our hope is that Velasco will 
take Toro into his confidence as a kind of secretary and general handyman — this 
shouldn't be difficult as Toro was at Velasco's side with two sub-machine-guns 
draped over his shoulders up to the moment Velasco left the Presidential Palace. 
I've notified the Buenos Aires station, set up a contact plan for an officer of that 
station, and requested that Toro be placed on the list for the polygraph the next 
time the interrogators come around. Hopefully Toro will have his affairs arranged 
so that he can leave by the end of the month. 

Over the week-end I'm going to Guayaquil and to the beach for a day — then 
to Manta and Portoviejo, the two principal towns of Manabi province just north 
of Guayas. In Portoviejo I'll introduce Julian Zambianco to Jorge Gortaire's 
brother, Frederico Gortaire, J an Army lieutenant-colonel and commander of the 
Army units in the province. Because of the extreme poverty in Manabi province, 
even by Ecuadorean standards, communist activities there have prospered in 
recent years. Zambianco has been working several operations in the province 
including support of a well-known anti-communist priest, and he'll be able to 
handle contact with Gortaire on his frequent trips there. Contact arrangements 



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were made by Jorge Gortaire when he was in the province last month, so getting 
this new operation going will be easy. The purpose is to be able to pass 
information on communist activities in Manabi to Lieutenant-Colonel Gortaire 
who, according to his brother, will not hesitate to take strong and prompt action 
unfettered by the political restraints often imposed on Colonel Lugo in 
Guayaquil. 

Warren Dean is leaving shortly for six or eight weeks' home leave. Too bad 
about Gil Saudade. Normally when a Chief of Station leaves the Deputy simply 
takes over as Acting COS. But with all the tension and instability right now Dean 
asked for a temporary replacement from headquarters. It'll be Dave McLean, J a 
Special Assistant to Colonel King, J the Division Chief who, surprisingly, 
managed to survive the head-rolling exercise after the Cuban invasion. While at 
headquarters Dean is going to push for one or two more slots for case officers 
under Embassy cover. 

Quito 22 June 1963 

The struggle is growing within the government among the factions favouring 
different lines of action in the face of the growing tension and fear of imminent 
insurgency. Juan Sevilla, the Minister of the Treasury, is the leader of the hard- 
liners while Jaime del Hierro, Minister of Government, is somewhere in between, 
trying to manoeuvre so that the Liberals can stay in the government and retain 
their emoluments. Arosemena leads the doves, who refuse to see the danger, and 
the leftists, who would like to see the power of the traditional parties broken. 
Thus the cooperation we're getting from del Hierro in the security field is mixed. 

Today, for example, the government finally announced a programme that I've 
been pushing since last year to restrict travel to Cuba. From now on travel to 
Cuba by Ecuadoreans is formally banned and all passports will be stamped 'Not 
Valid for Travel to Cuba'. This programme is the work of Pablo Maldonado who 
told me only recently that such a drastic measure would still be very difficult to 
get approved. On the other hand del Hierro still evades all my requests for access 
to the Cuban woman who was training in Guayaquil — now she's been sent to 
Tulcan which is practically isolated and a place from which she could 'escape' 
and disappear across the border in Colombia. 

In Guayaquil two days ago, an anti-communist television commentator 
narrowly escaped when a bomb demolished his car. Yesterday Colonel Lugo's 



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police raided a bomb factory and storage facility at the isolated house of Antonio 
Chang, a militant of an URJE faction, following a lead provided by a base agent. 
Chang's wife, two sons, a Spanish bomb technician and a helper were all arrested 
and have made sensational declarations, including the fact that they were trained 
by a Cuban. (The Cuban hasn't lived in Cuba since the 1940s but this item was 
hidden in small print in the propaganda coverage.) 

Meanwhile we're trying to keep media coverage going on all the cases, old as 
well as new, and stations in countries nearby are helping. As each case breaks we 
advise Caracas, Bogota, Lima, Rio de Janeiro, Santiago and others, mailing 
immediately the clips of what's been published. These stations generate editorial 
comment on the communist danger in Ecuador and send clips back to us which 
we use to generate still more comment based on the Ecuadorean image abroad. 

Dean has made one last effort before going on home leave to salvage a little 
mileage from Reinaldo Varea, our discredited Vice-President. He told Varea to 
get going on speeches related to all the recent cases revealing communist plans 
for action and the bombings. Yesterday Varea began with a speech at the national 
convention of the Chamber of Industries, denouncing communism as a cancer 
seeking to destroy the national life. Hopes for his succeeding Arosemena are ever 
so slim but three days ago the Supreme Court began hearing charges against three 
persons in the junk swindle and Varea, happily, wasn't one of them. 

Quito 25 June 1963 

Yet another sensation broke today: this one without our help. The case began 
this morning when one of the revolutionary paratrooper group led by Lenin 
Torres, still under arrest since they were discovered last year trying to help the 
guerrillas they had arrested to escape, themselves escaped and joined with three 
others in order to hijack one of the Area Airlines DC-4's that fly between here 
and Guayaquil. The plan was to fly over Quito distributing fly-sheets from the 
aircraft telling people to mass at the Presidential Palace and demand the release 
of Torres and the other paratroopers still being held. Also while the aircraft was 
circling URJE members would have carried out a series of intimidation bombings 
and would have demanded the release of Flores, Noboa and Roura as well as the 
paratroopers. They would have landed, taken aboard the released prisoners and 
flown to Cuba. 



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The paratrooper who escaped had been outside the prison under guard on an 
urgent family matter, but the guard, who was overpowered, tied and gagged, and 
left behind, got loose and reported the planned hijacking which he had overheard. 
Pacifico de los Reyes, J Chief of Criminal Investigations in Quito, placed some 
of his men in maintenance uniforms at the airport and when the four hijackers 
arrived they were immediately taken into custody Seized with them were arms, 
bombs, tear-gas canisters, walkie-talkies, and TNT — as well as the fly-sheets. 
After their arrest they implicated Araujo and Ribadeneira in the plan, although 
this may well be a little provocation by de los Reyes. The whole episode, in fact, 
may have been staged or at least well-penetrated. 

The story is headlines in the afternoon papers and has sent another shock- 
wave across the country as it's the first political hijacking here. 

Quito 27 June 1963 

Today is a bigger day for propaganda than most but it illustrates how our 
campaign to arouse concern over the communist problem has been going. The 
front page of El Comercio carries four articles related to it. The headlines report a 
press conference yesterday by Reinaldo Varea % in which he condemned 
communism for threatening the country with organized subversion, including 
acts of terrorism and massacre. He also pointed to Cuba, supported by Russia and 
China, as the focal point for communist terror in America, adding that when the 
Congress convenes in August a special law against terrorism should be passed, 
possibly to include the outlawing of communism. A second article reports a press 
conference by Jaime del Hierro, in which he promised to exterminate every 
centre of communist terrorism in the country. A third article describes follow-up 
raids of Colonel Lugo's police in Guayaquil and the discovery of another bomb 
factory from which 150 bombs were seized — it also reports a strategy meeting 
held two days ago between Colonel Lugo, Manuel Cordova, the Commanding 
General of the National Police and the Governor of Guayas province. A fourth 
article describes the latest revelations in the frustrated airliner hijacking. Not to 
be forgotten, of course, is the junk swindle, and a fifth front-page article relates 
the latest development in this case. Aside from the front page, the lead editorial 
expresses alarm over the recent terrorist cases and still another editorial wishes 
success to some Cuban exiles who recently landed a raiding party in Cuba. 



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Quito 28 June 1963 

Police in Guayaquil under Colonel Lugo seized some 300 more bombs in 
raids yesterday, and arrests of terrorists there now number nineteen. 

Also yesterday, Juan Sevilla, J Minister of the Treasury, was honoured at a 
banquet given by the Chambers of Industry and Commerce and the Textile 
Association. In condemning communism Sevilla said: 'The country is suffering a 
grave moral crisis. It is discouraging to walk through government offices and see 
how moral values have deteriorated. It is indispensable that we reestablish moral 
values. ' He was given a parchment in appreciation of his 'clear democratic 
position in defence of free enterprise and of our country's Western ideology'. 

Media exploitation of the airliner hijacking continues as does the Roura case. 
Today it was announced that the money taken from Roura will be examined by 
experts to see if it is counterfeit. This is a delaying formality because I've already 
told Jaime del Hierro that the Treasury Department in Washington has refused to 
certify that the US currency is counterfeit. 

Quito 5 July 1963 

The chain of recent cases, particularly the Roura and Flores cases, has 
produced one of the results we wanted. At a special meeting of the PCE Central 
Committee the whole Pichincha Provincial Committee under Echeverria was 
dismissed, with Roura expelled from the party and Echeverria suspended. 
Already Jaime Galarza, one of Echeverria's lieutenants, has published an article 
suggesting that Pedro Saad, PCE Secretary-General, was behind the revelations 
in the Flores document and Roura's arrest, because such information could only 
come from highly placed party members. 

The momentum of the last three months' campaign is having other effects. 
Most of our political-action agents, particularly the rightists in the ECACTOR 
project, are reporting improving disposition to a military rather than a 
Congressional move against Arosemena, what with the alarm and gravity of the 
current situation. At the Ambassador's reception yesterday, moreover, the 
politicians talked considerably of their surprise that communist preparations have 
progressed so far. Moreover, everyone seemed to be apprehensive over the 
spectre of Velasco's return and the probability that he'll win again next year. 
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Arosemena, but many realize the odds favour Arosemena and his patronage over 
a weak and divided Congress. 

Quito 8 July 1963 

Rafael Echeverria is still hiding and has seen our agents only rarely In order 
to get closer monitoring of his activities, and possibly to discover his hiding- 
place, I've arranged to turn over the Land Rover bought for Jorge Gortaire's trip 
to Luis Vargas, a PCE penetration agent. I gave the car to Jose Molestina, J a 
support agent and used-car dealer, to place on sale, and at the same time John 
Bacon sent Vargas around to make an offer. Molestina doesn't know Vargas, 
much less as a communist, and when he told me of the offer I told him to take it. 
Now Vargas will probably be asked by Echeverria (who has no private 
transportation) to drive him around for his meetings. 

Media exploitation continues on the recent cases as well as on efforts to 
salvage Varea. The Guayaquil base placed an editorial in El Universo, the main 
daily there, praising Varea for his recent anti- communist speeches. We replayed 
the editorial here in El Comercio. We've also used the CEOSL to condemn 
communist plans for terrorism. 

Operations at the Georgetown station (British Guiana) have just brought a 
big victory against the Marxist Prime Minister, Cheddi Jagan. Jagan has led that 
colony down a leftist-nationalist path since coming to power in the 1950s on the 
strength of Indian (Asian) predominance over blacks there. The Georgetown 
station operations for several years have concentrated on building up the local 
anti-Jagan trade-union movement, mainly through the Public Service 
International J (PSI) which is the International Trade Secretariat for public 
employees. Cover is through the American Federation of State, County and 
Municipal Employees, J the US affiliate of the PSI. 

Last year through the PSI the Georgetown station financed an anti-Jagan 
campaign over the Budget that included riots and a general strike and precipitated 
British intervention to restore order. This past April, with station financing and 
direction, another crippling strike began, this one led by the Guiana civil servants 
union which is the local PSI affiliate, and it has taken until just now to force 
Jagan again to capitulate. Visitors here who have also been to the Georgetown 
station say eventually the Agency hopes to move the leader of the black 



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community into power even though blacks are outnumbered by Jagan and the 
Indians. 

Quito 11 July 1963 

Arosemena's out and a four-man military junta is in. 

It began last night at a banquet Arosemena gave for the President of the 
Grace Lines — W. R. Grace and Co. has large investments in Ecuador — to which 
high-ranking Ecuadorean military men were invited because the Grace Lines 
President is a retired US Navy admiral. During the toasts Arosemena made 
favourable commentary about US business operating in Latin America but he 
insulted our Ambassador by derisive reference to US diplomatic representatives. 
In his drunkenness Arosemena also demonstrated incredible vulgarity and finally 
left the banquet and his guests. 

This morning the chiefs of the military services decided at a meeting at the 
Ministry of Defense to replace Arosemena with a junta and about noon the 
Presidential Palace was surrounded by tanks and troops. I went down to the Hotel 
Majestic just in front of the Palace where Jorge Andino, J a support agent and 
owner of the hotel, arranged a room where I could watch the action. I also 
monitored the military intelligence radio and reported by telephone and walkie- 
talkie back to the station where frequent progress reports on the coup were being 
fired off to headquarters and to Panama (for the military commands there who 
receive all Agency intelligence reporting in Latin America). 

Several hours of tension passed as Arosemena, known to be armed, refused 
to receive a delegation from the new junta. He remained in the presidential living 
quarters while the junta members arrived and went to work in the presidential 
offices. Eventually Arosemena was disarmed by an aide and taken to the airport 
where he was placed on a military aircraft for Panama — the same place that 
Velasco was sent to less than two years ago. 

As the coup was taking place a leftist protest demonstration was repressed by 
the military with three killed and seventeen wounded but these figures will 
probably be much higher if an accurate count is ever made. Also during the coup 
Reinaldo Varea tried in vain to convene the Congress in order to secure his 
succession to the Presidency, but it's no use — he's finished. 

The junta is composed of the officers who commanded the Army, Air Force 
and Navy plus a colonel who was Secretary of the National Defense Council. The 



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Navy captain is the junta chief but Colonel Marcos Gandara J of the Defense 
Council is said unanimously to be the brains and main influence. No question 
that these men are anti-communist and will finally take the kind of action we 
want to disrupt the extreme left before they get their serious armed operations 
underway 

Quito 13 July 1963 

No problem for the junta in consolidating power. Loyal messages were 
received from military units throughout the country, civil liberties have been 
suspended, and communist and other extreme leftists are being rounded up and 
put in jail, more than a hundred in Guayaquil alone. Communism is outlawed 
(the junta's first act), censorship has been imposed, there is a curfew from 9 p.m. 
to 6 a.m., and next year's elections are cancelled. 

It will take some days for formal US recognition of the junta but we've 
already started passing data from the Subversive Control Watch List to Major de 
los Reyes here in Quito and to Colonel Lugo in Guayaquil which they are using 
with military colleagues in the arrests campaign. For the time being we'll keep 
working with these police agents, and after US recognition of the junta and 
Dean's return, decisions will be made on new contacts in the government. The 
most likely liaison contacts are the Minister of Defense, Colonel Aurelio 
Naranjo, who was chief of the Cuenca garrison and leader of the movement that 
forced Arosemena to break with Cuba; the Minister of Government, Colonel Luis 
Mora Bowen; J and the junta leader, Colonel Marcos Gandara. 

Besides outlawing communism the junta is looking favourably at the reforms 
that the civilians were never able to establish. In their first statement the junta 
said its purpose is to re-establish moral values because the country had reached 
the brink of dissolution and anarchy. Their rule will be limited to the time 
necessary to halt the wave of terrorism and subversion and to resolve the 
country's most urgent problems. They have also declared that their government 
will not be oligarchic and will have policies designed to stimulate economic and 
social development in order to raise the standard of living — not just through 
development, however, but also through the redistribution of income. Among its 
highest priorities are agrarian, tax and public administrative reforms. 

In a press conference Colonel Gandara said that reforms will be imposed by 
decree and that after repressing the extreme left the junta will call for a 



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constituent assembly, a new Constitution and elections. However, he added, the 
junta might stay in power for two years to accomplish these plans — which 
immediately caused a cry of outrage from politicians in all quarters. Today, rather 
sheepishly, the junta issued a statement saying that they will 'not be in power for 
a long time'. 

In justifying their takeover the junta said that Arosemena had spotted the 
national honour with his frequent drunkenness and his sympathy for communism. 
Arosemena, for his part, is saying in Panama, as Velasco did, that he still hasn't 
resigned. Varea is also in Panama now, but he had a happy departure. At the 
Quito airport where he was taken under arrest yesterday he was given an 
envelope from the junta containing a month's pay. 

Quito 31 July 1963 

The first three weeks of junta rule have been rather mild as military 
dictatorships go, in fact after all the crisis and tension in recent months one can 
even note a feeling of euphoria. Today the junta was recognized by the US but all 
along we've kept busy getting information to Major de los Reyes and Colonel 
Lugo. Goes to show how important station operations can be at a time when 
conventional diplomatic contacts are suspended. Even so, the most important 
communist leaders from our viewpoint, Echeverria, for example, have eluded all 
efforts to catch them. Very possibly some have even left the country. 

At least for the time being the junta has considerable political support from 
Conservatives, Social Christians and others - not formally as parties but as 
individuals. How long this will last is unknown because the junta is obviously 
determined to end the power struggle between Velasco and Ponce and the 
instability such caudillismo brings. Moreover, by stressing that they intend to 
wipe out special privilege and the rule of oligarchies while pledging projects in 
community development, housing, public-health and education, the junta is 
attracting considerable popular support. 

From our standpoint the junta definitely seems to be a favourable, if 
transitory, solution to the instability and danger of insurgency that were blocking 
development. By imposing the reforms this country needs and by taking firm 
action to repress the extreme left, the junta will restore confidence, reverse the 
flight of capital and stimulate economic development. 



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Quito 15 August 1963 

Dean is back from home leave and is moving fast to get established with the 
junta. Already he is regularly meeting Colonel Gandara, the most powerful junta 
member, Colonel Aurelio Naranjo, the Minister of Defense and Colonel Luis 
Mora Bowen, the Minister of Government. With Gandara he is using as bait the 
weekly Latin American and world intelligence summaries (cryptonym PBBAND) 
that are received from headquarters each Friday, translated over the week-end 
and passed to Gandara on Monday. Already Gandara has given approval in 
principle to a joint telephone- tapping operation in which we will provide the 
equipment and the transcribers and he will arrange the connections in the 
telephone exchanges and provide cover for the LP. Tentatively they have agreed 
to set up the LP at the Military Academy. What Dean wants is a telephone- 
tapping operation to rival the one in Mexico City where, he said, the station can 
monitor thirty lines simultaneously. After this operation gets going we'll save 
Rafael Bucheli for monitoring sensitive political lines without the knowledge of 
the junta. 

Gil Saudade has been transferred to Curitiba, Brazil (a one-man base in the 
Consulate) and his replacement, Loren Walsh J doesn't speak Spanish. Walsh, 
who transferred to WH from the Far East Division after a tour in Karachi, had to 
cut short his Spanish course in order to take the interdepartmental course in 
counter-insurgency that is required now for every officer going out as Chief or 
Deputy Chief of Station. What this means to me is that I've got to take over most 
of Saudade's operations: Wilson Almeida J and Voz Universitaria; the CEOSL 
labour operation with Matias Ulloa Coppiano, Ricardo Vazquez Diaz and Carlos 
Vallejo Baez; and the media operation built around Antonio Ulloa Coppiano, the 
Quito correspondent of Agenda Orbe Latinoamericano. Most of these agents are 
also leaders of the Popular Revolutionary Liberal Party and Antonio Ulloa runs 
the PLPR radio-station that we bought through him and Juan Yepez del Pozo, Jr. 
as a media outlet. This development is more than a little aggravating because the 
new deputy won't be able to take over any of these operations as none of the 
agents speaks good English. Dean said relief will come soon because he got three 
new Embassy slots; two will be filled in coming months and one early next year. 
All I can do with these new agents is hold their hands until somebody with time 
can really work with them. 



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Right now there are about 125 political prisoners in Quito, including not only 
communists but Velasquistas and members of the Concentration of Popular 
Forces. The junta policy is to allow them to go into exile, although some will be 
able to stay in Ecuador depending on their political antecedents — judgement of 
which, in most cases, is based on information we're passing to Colonel Luis Mora 
Bowen, the Minister of Government. Processing these prisoners, and others in 
Guayaquil and elsewhere is going to take a long time because of interrogations 
and follow-up. Although Dean is working closely with the Minister of 
Government in processing the prisoners, he hopes to use these cases to start a 
new unit in the Ministry of Defense that will be solely dedicated to anti- 
communist intelligence collection - basically this is what we had previously set 
up in the police. In fact the Ministry of Defense will be better because politics 
sooner or later will come back into the Ministry of Government and the police, 
while the military unit should be able to remain aloof from normal politics, 
concentrating on the extreme left. 

First on the junta's programme of reforms are the universities and the 
national cultural foundation called the Casa de la Cultura, both of which have 
long traditions as centres of leftist and communist agitation and recruitment. 
Several station and base operations are focused on giving encouragement to the 
junta for university reform including agents controlled through Alberto Alarcon 
in Guayaquil and the student publication Voz Universitaria published by Wilson 
Almeida. According to Gandara the first university reform decree will be issued 
in a few days with the important provision that student participation in university 
administration will be greatly reduced. 

Quito 30 August 1963 

Labour operations always seem to be in turmoil but now and then they 
produce a redeeming flash of brilliance. Ricardo Vazquez Diaz, one of the labour 
agents I took over from Gil Saudade, told me the other day that his mistress is the 
official shorthand transcriber of all the important meetings of the Cabinet and the 
junta and that she has been giving him copies so that he can be well-informed for 
his CEOSL work. He gave me samples and after Dean saw them he told me to 
start paying her a salary through Vazquez. From now on we'll be getting copies of 
the record of these meetings even before the participants. In the Embassy we'll 
make them available just to the Ambassador and the Minister Counsellor, and in 



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Washington short summaries will be given limited distribution with the entire 
Spanish text available on special request. The Ambassador, according to Dean, is 
most interested in seeing how the junta and Cabinet members react to their 
meetings with him and in using these reports to plan his meetings with them. 
Eventually we'll try to recruit Vazquez's mistress, ECSIGH-1, J directly, but for 
the moment I'll have to work this very carefully in order not to jeopardize the 
CEOSL operation. Vazquez claims he's told no one of the reports, which I 
believe, because, if he told anyone, it would be one of the other CEOSL agents 
who probably would have mentioned it to me. These reports are jewels of 
political intelligence — just the sort of intelligence that covert action operations 
should produce. 

(There has been a change, incidentally, in terminology: the operations that 
used to be called PP operations — labour, youth and students, media, paramilitary, 
political action — are now called covert action, or CA, operations. In headquarters 
this change in terminology was made at the same time the old PP staff was 
merged with International Organizations Division to form what is now called the 
Covert Action Staff.) 

In labour operations themselves we've had serious problems with the new 
government, partly as a result of the junta's arbitrariness — the right to strike, for 
example, is suspended. In this respect the junta tends to treat the CEOSL trade- 
union movement much in the same fashion as it treats the CTE. This general 
trend is aggravated by the Minister of Economy, Enrique Amador Marquez, | 
who is one of the former labour agents of the Guayaquil base terminated last year 
for regionalism. Amador is doing all he can to promote decisions favourable to 
his old CROCLE and COG friends and detrimental to CEOSL. 

Right now the most serious case involves the junta's attempts to reorganize 
the railways which are one of the many inefficient government autonomous 
agencies that together spend about 65 per cent of public revenues. The lieutenant- 
colonel appointed to run the railways is favouring the CEDOC (Catholic) railway 
union which is backed by COG and CROCLE against the other railway union 
which is part of CEOSL and is an affiliate of the International Transport Workers 
Federation J (ITF) in London. 

I arranged for Jack Otero, J the Assistant Inter-American Representative of 
the ITF and one of our contract labour agents, to come to Quito from Rio de 
Janeiro to help defend the CEOSL railway union. He is here now but instead of 
following my instructions to approach the matter with restraint he started 



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threatening an ITF boycott of Ecuadorean products. The spectre of boatloads of 
rotten Ecuadorean bananas sitting in ports around the world provoked counter- 
threats from the junta and we've had to cut Otero's visit short. The ITF railway 
union may have to suffer for a while but we're going to get action now from 
Washington, probably from someone like Andrew McClellan J who replaced 
Serafmo Romualdi as the AFL-CIO Inter-American Representative when 
Romualdi set up the AIFLD. What the junta needs is a little education on the 
difference between the free trade -union movement and the CTE, but. this may 
not be easy with Amador working behind the scenes for CEOSL'S rivals. 

The Minister of Government is very cooperative in following our advice over 
the matter of the political prisoners. We have a special interrogation team here 
now from the US Army Special Forces unit in the Canal Zone: they're from the 
counter-guerrilla school there and are helping process the interrogation reports 
and prepare follow-up leads. The results aren't especially startling but they are 
providing excellent file information. As a result the prisoners are being released 
in a very slow trickle and most are choosing exile in Chile. Araujo is one of the 
big fish that was able to hide, but, a few days ago he and six others got asylum in 
the Bolivian Embassy. Chances are he'll be there a long time before the junta 
gives him a safe conduct. 

University reform continues. Already the universities in Loja and Guayaquil 
have been taken over and Central University here in Quito is due next. What this 
means is the firing of communists and other extreme leftists in the university 
administrations and faculties. The same process is under way in the primary and 
secondary schools and is in charge of the military governors of each province. 

Reforms in the government administration are also widening. Already the 
Ministry of Foreign Affairs and the Ministry of Economy are being reorganized. 
So far the junta's not doing so badly — tomorrow Teodoro Moscoso, the 
Coordinator of the Alliance for Progress, arrives to negotiate new aid agreements. 

Quito 8 September 1963 

These labour operations are so messy they're forcing me to put practically all 
my other operations on ice for lack of time. No wonder Saudade had so few 
agents: they talk on and on so that one agent-meeting can fill up most of an 
afternoon or morning. 



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Our call for help from McClellan backfired. He sent a telegram to the junta 
threatening AFL-CIO efforts to stop Alliance for Progress funds and appeals to 
the OAS and UN if the junta doesn't stop its repression of trade unions. Three 
days ago the Secretary-General of the Administration denounced McClellan's 
telegram and showed newsmen documents from CROCLE and COG backing the 
junta and the colonel in charge of the railways. Now the junta is going to suspend 
the railway workers' right to organize completely. Somehow we have to reverse 
this trend and we asked for a visit from some other high-level labour figure from 
Washington, hopefully William Doherty, } the former PTTI Latin American 
Representative and now with the AIFLD. Doherty is considered to be one of our 
more effective labour agents and Dean thinks he might be able to change the 
junta's attitude towards our organizations. 

Not long ago the CA staff sent two operations officers to the Panama station 
to assist in labour operations throughout the hemisphere much as the Technical 
Services Division officers in Panama cover the area. They came for a short visit 
to Quito, more for orientation than anything else, but they're going to get ORIT to 
send someone to see the junta about these problems. Recently, according to Bill 
Brown J who is one of the labour officers, the Secretary-General of ORIT, Arturo 
Jauregui, } was fully recruited so that now he can be guided more effectively. 
Before, our control of ORIT in Mexico City was exercised through Morris 
Paladino, J the Assistant Secretary-General and the principal AFL-CIO 
representative on the staff. Possibly we will get Jauregui himself to intervene. 

We've also had two polygraph operators here for the past week testing agents. 
I decided finally to meet Atahualpa Basantes, J one of our PCE penetration 
agents who has been reporting since 1960 but who had never been met directly 
by a station officer, using the polygraph as the excuse. 

The interview with Basantes was interesting because it showed how useful 
the LCFLUTTER is for things other than determining honesty in reporting and 
use of funds. In the case of Basantes, which- is not unusual according to the 
operator, the polygraph brought out a flood of remarks about his motivation and 
his feeling towards us and his comrades in the party. He's certainly a confused 
man, drawn to us by money yet still convinced that capitalism is destructive to 
his country. Why does he work for us? Partly the money, but he rationalizes that 
the PCE leadership is rotten. From now on I'll try to see him at least once a 
month. His reporting has fallen off during the last six months, mostly because Dr 
Ovalle } is such a poor agent handler, so I'm now looking for a new cutout. 



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Instead of a raise in pay, which could be insecure, I've agreed to pay the premium 
on a new life-insurance policy for Basantes — it's expensive because he's in his 
late forties and his health is poor, but it'll be one more control factor. 

The polygraph operator who worked with me on the Basantes case is Les 
Fannin. J Fannin was arrested in Singapore in 1960 while he was testing a local 
liaison collaborator whom the station was trying to recruit as a penetration agent 
of the Singapore police. The Agency offered the Singapore Prime Minister some 
three million dollars as a ransom for Fannin and Secretary of State Rusk even 
wrote a letter of apology in the hope of getting Fannin out. Nevertheless, he spent 
months in the Singapore jail before being released. He told me the Agency 
analysis of the case suggested that the British MI-6, which controlled the 
Singapore service at the time because Singapore was still a British colony, had 
been aware of the attempted recruitment from the beginning. In a strong reaction 
to this violation of the long-standing agreement that the CIA refrains from 
recruitments in British areas except when prior permission is granted, MI-6, 
according to Fannin, arranged for the Singapore security official to play along, 
and then at the moment of the polygraph they had Fannin arrested. 

One of Saudade's agents whom he sent to Cuba has just been arrested on his 
return to Guayaquil and nobody seems to know what to do about him. The agent 
is Cristobal Mogrovejo, J the same Loja agent whom we used to front for the 
near-disaster audio installation in the Loja Club beneath Rafael Echeverria's 
apartment. Dean is taking a hard line on Mogrovejo because the agent was told 
not to return to Ecuador when he was met by officers from the Miami (ex- 
Havana) station after leaving Cuba. We had sent that instruction precisely to 
protect Mogrovejo, but since he refused to comply, Dean isn't anxious to spring 
him loose. He was arrested because he had Cuban propaganda material in his 
baggage (incredibly stupid) on his arrival. Already the arrest is causing wide 
comment in Loja where Mogrovejo is President of the University of Loja law- 
student association and well known as a staunch Catholic. 

For the time being the audio operations against Echeverria's apartment and 
Flores's apartment are suspended. Sooner or later Flores will go into exile and 
Echeverria is still hiding. The audio-photo operation at the PCE bookstore is also 
suspended since the junta closed the bookstore right after the coup. Now we'll 
have to take out the audio equipment with more pounding and squealing of 
spikes. 



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Quito 20 September 1963 

This has been a month of constant movement of people: agents, visitors and 
new station personnel. The first of the new station operations officers has arrived 
— he's Morton (Pete) Palmer J and his cover is in the Embassy economic section. 
Unquestionably he'll be an excellent addition to the station and I'm already 
beginning to unload some of the covert action operations on him. 

Dean appointed me to look after another visitor: Ted Shannon, J the former 
Chief of Station in Panama and now Chief of the section of the CI staff in 
headquarters responsible for CIA officers under AID Public Safety cover. 
Shannon was the founder of the Inter-American Police Academy J in Panama 
(which, incidentally, will be moving next year to Washington with a new name: 
the International Police Academy }) and he was rather upset that we haven't been 
fully using our Public Safety cover officer, John Burke. J Dean explained to 
Shannon his fears about Burke's getting into trouble through his over-eagerness, 
but after Shannon left Dean told me to start thinking about what operations we 
can give to Burke. Dean is worried about criticism in headquarters that he's not 
using his people, but in fact there's lots of work Burke can do. The first thing will 
be to integrate him with the Special Forces interrogation team working on the 
political prisoners. 

Reinaldo Varea J returned to Ecuador yesterday but his troubles are far from 
over. Immediately after the coup the junta cancelled the impeachment case 
against Varea but announced that he would have to stand trial if he ever returned. 
His return means that his trial begins again, and he has also agreed to refrain 
from political activity. From Panama he had gone to Houston where a 
headquarters' officer gave him termination pay, but if Dean needs to see him he 
can establish contact through Qtto Kladensky. } 

Manuel Naranjo was replaced as Ecuador's UN Ambassador and has also 
returned. Headquarters was highly impressed with his work for us at the UN, and 
Dean feels the same — in fact he's going to nominate Naranjo, who is now back at 
work in the Socialist Party, for Career Agent status which would mean 
considerable income, fringe benefits, job tenure and retirement pay. 

Juan Sevilla, J Arosemena's Minister of the Treasury, is the only one of our 
political-action assets in the old government to get a new job with the junta. 
Probably because of his firm action during the months before the junta took over, 
he's been named by the junta as Ecuador's new Ambassador to West Germany. 



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We're forwarding the file to the Bonn station and making contact arrangements in 
case they want to use him in Germany. A few weeks ago I gave Sevilla money for 
Carlos Rendon, J his private secretary, who caught Roura and made the plant on 
Flores. Apparently Rendon has been threatened and is going to leave the country 
for a few months. 

Lieutenant-Colonel Federico Gortaire was reassigned from Army commander 
in Manabi province to Military Governor of Chimborazo Province. For the time 
being we'll communicate with him through Jorge Gortaire in order to save time, 
but Dean wants to have one of the new officers begin going directly to Riobamba 
to see Colonel Gortaire as soon as possible. 

Dean still refuses to intercede with the Minister of Government, Colonel Luis 
Mora Bowen, on behalf of Cristobal Mogrovejo. Mogrovejo told the police that 
he went to Cuba on our behalf, and his mother even came to see the Ambassador 
but Dean is playing real dumb. I think he ought to help the poor guy out of that 
stinking, miserable jail. 

The country's honeymoon with the junta is fading fairly fast. The traditional 
political parties are getting worried that the junta may stay in power longer than 
they've admitted, and their massive promotions of military officers haven't been 
very popular. Especially since among the first to be promoted were the junta 
members themselves: now they are one colonel, one admiral and two generals. 

Quito 15 October 1963 

Labour operations are still unsettled because of the junta's arbitrary actions. 
Since last month, a new national traffic law has been in preparation but the junta 
refuses to consult the national drivers' federation (taxi, truck and bus drivers), 
which will be the organization most affected by the law. Everyone understands 
the need to stop the general traffic chaos and the carnage that so frequently 
occurs on the roads, especially when overcrowded buses roll off the 
mountainside because of their poor mechanical condition: traditionally, the 
driver, if he's alive and can move, flies from the scene as fast as he can go. But 
the drivers' federation is our top priority to woo away from the CTE and 
eventually into the CEOSL. So we called Jack Otero } back from Rio de Janeiro 
to see if he could intercede with the junta on the traffic law question, even though 
the drivers' federation isn't affiliated with the ITF Something may come from the 
effort, perhaps not with the junta but with the drivers' federation. 



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Even the AIFLD operation is beset with problems. The country programme 
chief here isn't an agent and so we can't guide him (except through Washington) 
so that his programme harmonizes nicely with ours. Doherty finally came to help 
straighten out the AIFLD programme for us, but this isn't the end of it. He's going 
to arrange to have Emilio Garza, J the AIFLD man in Bogota who is a recruited 
and controlled agent, come here for as long as is needed to make sure the AIFLD 
programme is run the way Dean wants it run. Mostly it's a question of personnel 
assignments through which we want to favour our agents. Sooner or later all the 
AIFLD programmes will be run closely by the stations — until now the expansion 
has been so fast that in many cases non-agents have been sent as AIFLD chiefs 
and can only be controlled through cumbersome arrangements of the kind we've 
had here. 

Political prisoners are being released to go into exile as their cases are 
reviewed. There are still well over one hundred of them — Flores and Roura are 
both going to Chile in exile. Araujo finally got a safe conduct and left for Bolivia 
a week ago. Echeverria is still in hiding, rejecting the bait we set with the Vargas 
J Land Rover. Cardenas, Vargas, Basantes } and our other penetration agents 
have somehow managed to avoid arrest. 

For a few days last week our Popular Revolutionary Liberal Party agents 
were also taken as political prisoners. They held a meeting in violation of the 
government's prohibition of all political meetings without prior permission, and 
among those arrested were Juan Yepez del Pozo, Jr., Carlos Vallejo Baez { and 
Antonio Ulloa Coppiano. } They were only held for a couple of days and later 
Vallejo and Ulloa admitted to me that they staged the whole thing for publicity. 
Pete Palmer J is going to take over these agents so that next time they will 
discuss this sort of caper with us first — otherwise they can't expect us to bail 
them out if the junta is slow in letting them go. 

Another new station officer arrived: Jim Wall, J an old friend who went 
through the training programme with me at Camp Peary. Wall has just finished 
two years under non-official cover in Santiago, Chile, as a university student. 
He's going to take over some of my operations too — probably the ECACTOR 
political-action agents His cover will be in the Embassy economic section, along 
with Palmer. 

The polygraph operators are now in Buenos Aires and Dean wants to be sure 
that Medardo Toro } is 'fluttered'. Our impression is that the Buenos Aires station 
isn't taking this case very seriously — undoubtedly they have plenty of Argentine 



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problems to worry about. In order to see why production from the operation is 
not better, Dean asked me to go to Buenos Aires to interpret for the polygraph 
examination of Toro. I'll also go to Montevideo because Toro is taking the 
treatment for his back there and has made contact on behalf of Velasco with an 
officer of the Cuban Embassy in Montevideo. 

Moscoso's visit brought good news for the Ecuadoreans — ten million dollars 
in new loans from the Inter-American Development Bank have been announced 
this month. 

Quito 7 November 1963 

It was a strange trip, disappointing on the Toro case but very encouraging for 
my coming assignment in Montevideo. In Buenos Aires the station considers the 
Toro case something less than marginal, just as we had suspected. About all we 
can hope for is to have an officer from the station meet Toro occasionally to 
receive his reports and pay his salary. In Montevideo it's worse — the Chief of 
Station there, Ned Holman, J doesn't want anything to do with Velasco. Holman 
was Noland's predecessor as Chief of Station in Quito so he's had plenty of 
chance to get soured by Velasco. Even so, the case is interesting because Velasco 
is opening a channel to the Cubans through Toro who has already met Ricardo 
Gutierrez two or three times. Gutierrez is carried by the Montevideo station as 
the Chief of the Cuban intelligence operation which the station believes is 
targeted in large part towards Argentina and the guerrilla operations now going 
on there. It will be interesting to see whether Velasco gets money from the 
Cubans — it wouldn't be too unlikely, if he were to become a candidate again for 
President, because he refused to break with Cuba and has often spoken highly of 
Castro. 

In Buenos Aires, besides interpreting on the Toro case I interpreted on two 
other cases: one was a labour leader who is one of the station's best penetrations 
of the Peronist movement and the other was an Argentine Naval intelligence 
officer and his wife who are working together as a penetration of the Naval 
intelligence service. 



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Quito 10 November 1963 

On 31 October, the national drivers' federation was required by the 
government to undergo 'fiscal analysis', which means they're going to bring under 
control the one organization that can stop the country completely It'll be a long 
time before this union can be brought into the ITF. In fact it's not really a union 
because many of its members are owners of taxis, trucks and buses and even 
gasoline stations. Its orientation, then, is middle class rather than working class 
but for our long-range planning it's the most important of the organized trade 
groups to be brought under greater influence and control. 

Bill Doherty J arranged for Emilio Garza, } the Bogota AIFLD agent, to 
come to help us smooth out the problems between our CEOSL agents and the 
AIFLD operation. The agent was an excellent choice and I've already 
recommended that he be transferred to Ecuador when his assignment in Bogota 
ends. He's the most effective of the career labour agents that I've worked with. 

For the past six weeks there have been regular terrorist bombings, mostly 
against government buildings. They started in Quito — five occurred in one week 
in mid-October — but now they've spread to Guayaquil. None of our agents seems 
to know what group is behind the bombings and Dean's getting jittery. It's 
embarrassing because the bombings make the junta look inept in spite of all the 
arrests and forced exiles. 

The day after tomorrow I'm going to try to recruit Jose Maria Roura who's 
been rotting away in the Garcia Moreno prison since May. He's being allowed to 
leave the country and will fly to Guayaquil, then to Lima, La Paz, and eventually 
to Chile. 

Colonel Lugo has been in Quito for the past few weeks and he told me that 
the police interrogators report that Roura is very depressed, even disillusioned, 
about his political past. He is also extremely concerned about his family which is 
completely destitute and living on the charity of friends. This information 
coincides with what we've learned from the interrogation reports received 
through other sources and from information on Roura's family obtained through 
the PCE penetration agents. Lugo suggested to me that Roura may be ripe for a 
recruitment approach but he doesn't think it should be made in the prison. 

After discussing the possibilities, Dean asked me take the same Guayaquil- 
Lima flight as Roura and to try my luck on the plane. We've arranged for 
ECBLISS-1 } the Braniff manager in Guayaquil, who is an American and a base 



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support agent, to have me seated next to Roura. Headquarters' approval just came 
in and the Lima station is going to get the police to allow Roura to stay over for a 
few days if he wants because he only has about two hours between arrival from 
Guayaquil and departure for La Paz. For our purposes any possible follow-up 
after the flight should be in Lima rather than La Paz. When I talk to him I'll invite 
him to stay in Lima at my expense. After all these months in one of the world's 
gloomiest prisons he might just accept. In any case it's worth the risk of a scene 
on the plane — Roura is known to be extremely volatile — because we need a 
penetration of the exile community in Santiago and Roura would be an excellent 
source when he eventually returns here. 

Quito 13 November 1962 

It didn't go perfectly, but it wasn't a disaster either. I took the noon flight to 
Guayaquil and to my surprise Roura was on the same flight under police guard. 
Colonel Lugo had told me that Roura was going on the morning flight and the 
last thing I wanted was to be seen in Quito by Roura or in any connection with 
him at all. Arrangements by the base with the Braniff manager were perfect — he 
was waiting for me at the airport at three o'clock this morning and gave me the 
seat right next to Roura who would be released from his police guard when he 
boarded the aircraft. 

When I walked on the plane I was shocked to see that there were only about 
ten passengers in the whole cabin. The stewardess conducted me to the seat next 
to Roura, who was already there, and my planned introduction and cover story 
began to crumble. I had wanted to begin the conversation as some anonymous 
traveller striking up a conversation with another anonymous traveller. And I 
wanted the seat next to Roura in case the flight were crowded — so that someone 
else wouldn't be sitting in that seat. But now it was too obvious. 

A seemingly endless silence followed after I sat down next to Roura. I tried 
desperately to think of some new excuse to ease into a conversation — somebody 
had to say something because I was clearly there for a purpose. Suddenly the 
stewardess returned and suggested that I might like to move to where I could 
sleep since row after row was vacant. Time for recovery and a new plan. I went 
forward to a different seat, maybe ten rows ahead and began to get depressed. 

We rolled down the runway and into the air. As the minutes began to go by, 
five, ten, twenty; I felt more and more glued to my seat. I was going into a freeze 



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and beginning to think up excuses, like bad security, to offer later for not having 
talked to Roura. But somehow I had to break the ice and I finally stood up and 
began walking back to Roura's seat, in mild shock as when walking into a cold 
sea. 

I introduced myself, using an alias and Roura agreed nonchalantly as I asked 
if I could speak with him. I sat down and went into my new introductory routine, 
relaxing a bit as I went on. I was an American journalist who had spent the past 
few weeks in Ecuador studying the problems of illiteracy, disease and poverty for 
a series of articles. At the airport before the flight, I learned to my happy surprise 
that he was going to be on the same flight and I wondered if he would mind 
discussing Ecuadorean problems with me from the point of view of a communist 
revolutionary. I added that I knew of his arrest earlier in the year and I expressed 
wonderment that such arbitrary and unfair proceedings could occur. 

Over coffee we passed the flight discussing Ecuador. Roura spoke openly and 
relaxedly and we seemed to be developing a little empathy. About twenty 
minutes before we were to land in Lima I shifted the conversation to Roura's 
personal situation. He told me that he was taking a connecting flight to La Paz 
and after a few days would proceed to Santiago. He was bewildered over what to 
do about his family and was expecting hard times in exile. 

Now I had to make my proposal, ever so gently, but clear enough for Roura 
to understand. I said I would be seeing friends in Lima who are in the same 
profession, more or less, as I am. They too would probably like to speak with him 
and I was certain that they would offer him a fee for an interview since they 
represent a large enterprise. He was interested, but said he had permission from 
the Peruvians only to remain in the airport until the connecting flight. I said my 
friends could probably arrange permission for him to remain a few days and that 
he should ask the immigration authorities if he could spend at least the day in 
Lima and proceed to La Paz on a later flight perhaps tonight or tomorrow. Who 
knows, I said, whether some kind of permanent financial support might be 
arranged for him in Santiago and for his family in Quito. Perhaps, even, he could 
arrange for the family to go to Santiago to live with him. I sensed he was taking 
the bait and was beginning to understand. 

When the 'fasten seat belt' light came on I took out a piece of paper with my 
alias typed on it and the number of a post-office box in Washington. I said I 
would be staying in Lima at the Crillon Hotel and if he was able to stay for a few 
days he could call me at the hotel and we would continue talking. If not, he could 



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always reach me through the post-office box. He didn't say he would ask the 
airport authorities for permission to stay, but he didn't say no either. I thought he 
was deciding to stay. As a final touch, something I hoped would convince him I 
was knowledgeable, in fact I now hoped he realized I was CIA, I bade farewell 
pointedly calling him 'Pepito', which is the name his PCE comrades call him. I 
returned to my other seat for the landing. 

At the terminal building I walked down the steps and headed for the entrance 
where I was met by the Lima station officer who is in charge of liaison with 
immigration authorities. He had arranged for permission to be granted if asked by 
Roura, and indeed offered if Roura didn't ask — without, of course, creating 
suspicion that we were trying to recruit Roura. From just inside the terminal 
building we watched the Braniff aircraft because Roura had delayed inside. 
Eventually he appeared, descended the steps, but suddenly turned and rushed 
back up the steps and into the aircraft. At that moment about ten uniformed 
police who had been striding swiftly, practically rushing, towards the aircraft 
arrived at the steps. The leader boarded the aircraft and a long delay followed. 
The Lima station officer went to see his airport police and immigration contacts 
to find out what happened, and I went to the station offices in the Embassy to 
await news from the airport. If Roura stayed, I would check into the Crillon and 
wait for his call. If he proceeded to La Paz I would take the noon Avianca flight 
back to Quito. 

When I reached the Embassy they gave me the bad news. Roura had been 
frightened by the police when they rushed towards him and thought something 
terrible might happen. In the aircraft he refused to descend to the terminal until 
the flight continued. Then he was extremely nervous in the terminal and 
interested only inbeing sure he didn't miss the flight to La Paz which he took as 
planned. 

The Lima Chief of Station; Bob Davis, J apologized for the over-enthusiasm 
of their liaison service — the police approaching the aircraft were only trying to 
give him a warm welcome in preparation' for immigration's offer of permission to 
stay for a few days. The Lima station botched the operation — I am convinced that 
Roura would have stayed — and now we can only wait for a telegram or letter to 
the post-box. On the other hand Dean is thinking of a follow-up visit to Roura 
once he gets to Santiago. 

At the Lima station I asked how the penetration operation of the MIR is 
progressing — the one I had started in Guayaquil with the recruitment of Enrique 



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Amaya Quintana. The Deputy Chief of Station, Clark Simmons, J is one of my 
former instructors at Camp Peary and is in charge of the case. He told me that 
Amaya's information is pure gold. He has pinpointed about ten base-camps and 
caching sites plus identification of much of the urban infrastructure with full 
details of each phase of their training and planning. The Lima station has a 
notebook with maps, names and addresses, photographs and everything else of 
importance on the MIR which the station considers to be the most important 
insurgency threat in Peru. The notebook is in Spanish and is constantly updated 
so that just at the right moment it can be turned over to the Peruvian military. 

At the Lima station I sent a cable on the Roura recruitment to headquarters 
with information copies to Quito and La Paz. Dean had already seen the cable 
when I got back this afternoon and he's elated even though we can't be sure yet 
that Roura has accepted. Tomorrow I'll get Bolivian and Chilean visas for quick 
departure when Roura sends a telegram to the Washington post-box. 

Quito 17 November 1963 

It didn't take long to resolve the Roura recruitment. This morning we had a 
cable from the La Paz station with the special RYBAT sensitivity indicator, 
reporting that Roura was in a secret meeting with two of the leading Bolivian 
communists. At the meeting he told them of my attempt to recruit him and he 
said if he ever sees me again he'll kill me. One of the two Bolivians is an agent of 
the La Paz station, it would seem, although possibly the source is an audio 
operation. I won't need the visas now, but Dean still thinks Roura may change his 
mind in six months or a year or two. At least he knows we're interested and he 
has the post-box number. 

I only have about three more weeks before leaving and as I turn over 
operations to the three new officers I am also terminating a number of the 
marginal cases — with provision, of course, for picking them up again if needed. 

Among those I've terminated is Dr Philip Ovalle, Velasco's personal 
physician and the cutout to Atahualpa Basantes, the PC E penetration agent. 
Ovalle is getting senile and is probably the main reason why Basantes's reporting 
has been in such a slide. Before termination I was able to get the Ambassador to 
have Ovalle placed back on the list of approved physicians for visas (the consular 
section had thrown him off because he sent some people with syphilis to the US), 
or otherwise he might have been difficult. The chances of Velasco's coming back 



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are now so slight that there's no reason to waste time seeing Ovalle for 
information on the Velasquistas. I recruited a new cutout for Basantes who I think 
can get the agent's reporting jacked up. He's Gonzalo Fernandez, J a former 
Ecuadorean Air Force colonel who was military attache in London until he was 
forced to retire for political reasons. As Basantes is also a former military officer 
the chances are that they will work well together. 

I also terminated the letter intercepts which 1 had taken back when the 
administrative assistant left a couple of months ago. The agents were pretty 
rattled at first but after I explained that we just don't have time for opening, 
reading, photography, closing, plus the two meetings for pick-up and return — 
they seemed to accept it. They liked the termination bonus and we made 
arrangements for meetings every two or three months to pay for propaganda 
they've burned. Not too bad at a couple of hundred dollars a ton. These postal 
intercepts are a waste of time, in my opinion, and only the headquarters desks 
that are ready to take anything, like the Cuban branch, will waste effort poring 
over letters and testing for SW. 

Tampa 10 December 1963 

On the flight home I compared the existing situation in Ecuador with what I 
met when I first arrived there. Noland practically wouldn't recognize the place 
with all the growth. In the Quito station we now have eight officers, including 
Gabe Lowe J who will arrive in the spring to fill the last new slot, as opposed to 
five when I arrived, plus two additional secretaries, several new working wives 
and an additional communications officer. In Guayaquil we still have only two 
officers inside the Consulate but have added one officer outside. Now Dean plans 
to add even more officers under non-official cover, particularly in Guayaquil. The 
station budget has also risen dramatically — from about 500,000 dollars in 1960, 
to almost 800,000 dollars now. 

Operations are better now, too. The counter-insurgency programme has 
improved, helped along by all the arrests, the exiling and the general repression 
undertaken by the junta. We have some new operations under way — particularly 
the new telephone tapping and military intelligence unit that Dean is setting up. 
Many of these activities are carried out in cooperation with the junta which, in 
turn, we have managed to penetrate through police and military officers and the 
junta's chief stenographer whom we have on our payroll. It looks as if operations 



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in the student field are going to improve, and in our labour operations, both 
CEOSL and the AIFLD are well established in spite of all the problems they have 
had to face. The best of our PCE penetration agents have survived and we have 
added several more, including those of the Guayaquil base. 

So far as the general political situation is concerned the position is even more 
favourable. When I arrived in Ecuador, Araujo was Minister of Government and 
for two and a half years the traditional parties made a mess of things, thus 
encouraging the people to look for extremist solutions. All politicians, Velasco 
and his followers, the Conservatives, the Social Christians, the Liberals and the 
Socialists, had struggled for narrow sectarian interests, sometimes under the 
leadership of our agents and close liaison contacts. But they failed to establish 
through the democratic process the reforms to which they all paid at least lip- 
service. Now, at last, these reforms can be imposed by decree and it seems 
certain that the order imposed by the junta will speed economic growth. Land 
reform is still the greatest need. In a report published earlier this year, the UN 
Food and Agricultural Organization noted that some 800,000 Ecuadorean 
families (over three million people) live in precarious poverty while 1000 rich 
families (900 landowners and 100 in business and commerce) enjoy inordinate 
wealth. 



Notes: 



1 . Wall against which people are executed by the firing-squad. 



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Part Three 



Washington DC 8 February 1964 



One can't help being impressed on a first visit to the new headquarters 
building out in Virginia. It's a twenty- or thirty-minute drive up the Potomac river 
from Washington — very beautiful parkway along the cliffs with the headquarters 
exit marked 'Bureau of Public Roads' as if to fool someone. The building itself is 
enormous, about seven storeys with a somewhat 'H' shape, surrounded by high 
fence and woods — extremely complicated to orient oneself on the inside. I read 
that it was built for ten thousand employees and from the numbers of cars in the 
vast parking lots it seems that number may already have been passed. 

I spent two days with the Ecuadorean desk officer filling in the items that 
never get into formal reporting and catching up somewhat on the changes in the 
headquarters' bureaucracy. The most important change is the recent establishment 
of a new Deputy Directorate, the DDS & T (for Science and Technology), which 
was formed by merging the old Office of Scientific Intelligence and Office of 
Research and Reports, both of the DDI, with several other offices. This new unit 
has taken over all the processing of information and setting of requirements on 
progress around the world in the different key fields of science and technology 
with special emphasis, not surprisingly, on Soviet weapons-related developments. 
It is also responsible for developing new technical collection systems. The 
Deputy Directorate for Coordination has been eliminated. 

The other major change is in the DDP [1] where the old International 
Organizations Division and the Psychological and Paramilitary Staff merged and 
adopted the new name: Covert Action Staff. Headquarters' coordination and 
guidance for all CA operations (formerly known as PP operations) now centres in 
this staff. 

The people in the new CA staff, perhaps because many are veterans of the 
traditional friction between 10 Division and the geographical area divisions over 
activities of IOD agents in the field, have developed a new terminology that 
provokes no little humour in headquarters' halls. Instead of calling their agents 
agents anymore, they now insist in their memoranda and other documents on 
calling them 'covert associates'. Problems relating to agent control — the old IOD 
wound that would never heal — seem now to have diminished simply by not 
calling CA operatives agents anymore. 

Another change in the DDP that will take effect shortly is the merging of the 
Soviet Russia Division with the Eastern Europe Division — except that Greece 



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will pass to the Near East Division. Now all the communist countries in Europe 
will be in the same area division which will be called Soviet Bloc Division. The 
communications indicator for action by SB Division is also changing: from 
REDWOOD to REDTOP. 

Also, there is a completely new DDP division called the Domestic 
Operations Division (DOD) which is responsible for CIA intelligence collection 
within the US (on foreign targets, of course). DOD engages mostly in recruiting 
Americans for operations, e.g. recruitment of scientists and scholars for work at 
international conferences. DOD has a 'station' in downtown Washington DC and 
offices in several other cities. 

In WH Division the big news is that Colonel J. C. King { is finally on his 
way out as Division Chief. His power has gradually been chipped away since the 
Bay of Pigs invasion by separating Cuban affairs from regular Division decision- 
making and by surrounding King with various advisers such as Dave McLean, J 
who was Acting Chief of Station in Quito when the junta took over, and Bill 
Hood, J who has had the newly created job of Chief of Operations for the past 
year. King is being replaced as Division Chief by one of the senior officers who 
were brought into the Division after the Bay of Pigs from the Far East Division. 
He is Desmond Fitz- Gerald, J Deputy Chief of WH Division for Cuban Affairs 
— also a newly created job after the Cuban invasion. The regular Deputy Division 
Chief, Ray Herbert, } continues to handle personnel assignments and matters not 
related directly to operations against Cuba. 

Washington DC 10 February 1964 

I spent a night out at Jim Noland's house. They live in McLean not far from 
headquarters — everyone seems to have moved out that way. After return to 
headquarters Noland was assigned as Chief of the Brazil Branch in WH Division 
— a key job, with Brazil's continuing slide to the left under Goulart. Noland made 
several trips to Brazil last year and from what he says Brazil is the most serious 
problem for us in Latin America — more serious in fact than Cuba since the 
missile crisis. 

Operations in Brazil haven't been helped by a Brazilian parliamentary 
investigation into the massive 1 962 electoral operation, that began last May and 
is still continuing in the courts. The investigation revealed that one of the Rio 
station's main political-action operations, the Brazilian Institute for Democratic 



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Action (IBAD) and a related organization called Popular Democratic Action 
(ADET), J spent during the 1962 electoral campaign at least the equivalent of 
some twelve million dollars financing anticommunist candidates, and possibly as 
much as twenty million. Funds of foreign origin were provided in eight of the 
eleven state gubernatorial races, for fifteen candidates for federal senators, 250 
candidates for federal deputies and about 600 candidates for state legislatures. 
Results of the elections were mixed, with station-supported candidates elected 
governors in Silo Paulo and Rio Grande, both key states, but a leftist supporter of 
Goulart was elected governor in the critical north-east state of Pernambuco. In 
the Chamber of Deputies the balance among the three main parties stayed about 
the same which in some ways was seen as a victory. 

The parliamentary investigating commission was controlled somewhat — five 
of its nine members were themselves recipients of IBAD and ADEP funds — but 
only the refusal of the First National City Bank, J the Bank of Boston } and the 
Royal Bank of Canada J to reveal the foreign source of funds deposited for 
IBAD and ADEP kept the lid from blowing off. At the end of August last year 
President Goulart decreed the closing of both ADEP and IBAD, and the 
parliamentary report issued in November concluded that IBAD and ADEP had 
illegally tried to influence the 1962 elections. 

Washington DC 12 February 1964 

For the past few days I've been shuttling between the Uruguayan desk and 
the Cuban branch getting briefed on operational priorities against the Cubans, as 
my primary responsibility in Montevideo will be Cuban operations. Only five 
Latin American countries still have diplomatic relations with Cuba, and in 
Montevideo operations against the Cubans are the highest priority on the Station 
Related Missions Directive — the only station in the hemisphere where operations 
against a Soviet Embassy are in second place on the priorities list. The reason is 
that communist strength in Uruguay is growing considerably, particularly in the 
trade-union field, and is undoubtedly assisted by the Cuban Embassy there. 
Moreover, there have been strong indications that current guerrilla and terrorist 
activities in the north of Argentina are being supported from the Cuban Embassy 
in Montevideo. 

Right now there are two main objectives for Cuban operations in 
Montevideo. First, in order to promote a break in relations, we are using all 



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appropriate operations to support the Venezuelan case against Cuba for 
intervention and aggression based on the arms cache discovery on the Venezuelan 
coast last November. The arms have since been traced to a Belgian manufacturer 
who claimed to have sold them to Cuba. The purpose of the Venezuelan case is 
eventually to get a motion through the OAS calling on all Latin American 
countries with diplomatic relations with Cuba to break them. The hope is that 
such a motion, coming from Venezuela and not the US, would have sufficient 
momentum to get adopted by the OAS, particularly if enough propaganda of non- 
US-origin can be generated over the coming months. For the sake of discretion I 
haven't asked, but the whole campaign built around the arms cache has looked to 
me like a Caracas station operation from the beginning. I suspect the arms were 
planted by the station, perhaps as a joint operation with the local service, and 
then 'discovered'. 

While our overall objective in Uruguay is to effect a break in diplomatic 
relations with Cuba, we must meanwhile penetrate their Cuban mission in 
Montevideo either technically or by recruiting an agent, in order to obtain better 
intelligence about their activities. We already have a number of valuable 
operations going against the Cuban Embassy, but so far we haven't been able to 
penetrate it technically or to recruit any of its officers. 

Not that the station hasn't tried. Last year several cold recruitment 
approaches were made and there was the unsolicited defection of Rolando 
Santana. J Unfortunately, in the case of Santana, he had been in Montevideo only 
a short while and had not had access to sensitive information because he wasn't 
an intelligence officer. The case served nevertheless for propaganda operations. 

On another occasion we very nearly recruited the officer believed to be the 
Chief of Cuban Intelligence in Montevideo. This officer, Earle Perez Freeman, J 
had spurned a cold street approach for recruitment last December in Montevideo 
just before he was due to return to Cuba after some three years in Uruguay. In 
Mexico, where he was awaiting a flight to Havana, he suddenly appeared in the 
US Embassy and in discussions with station officers agreed to take asylum in the 
US. The officer in charge was Bob Shaw, } one of my former instructors at 
ISOLATION, and headquarters' halls are still reverberating over his carelessness. 
After making all the arrangements to evacuate Perez in a military aircraft from 
the Mexico City airport, Shaw took Perez in a car to the airport. On the way to 
the airport Perez panicked, jumped out of Shaw's car and disappeared in a crowd. 
No one yet can understand how Shaw failed to follow the first rule in cases like 



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these: to place Perez in the back seat with other officers by the doors on either 
side. Had he changed his mind before leaving Mexico City conversations in a 
controlled situation could perhaps have convinced him to come. At least a sudden 
panic and loss of contact would have been avoided. Perez returned to Havana and 
there has been no sign that his short contact with the Mexico City station became 
known to the Cubans, but opinion is unanimous in headquarters that the Mexico 
City station did a remarkably inept job on the case — not even an initial debriefing 
on Cuban operations in Montevideo. 

On agent recruitment priorities in Montevideo the Cuban branch is most 
interested in the code clerk whom the station has identified as Roberto 
Hernandez. According to Division D officers in charge of Cuban communications 
matters, the Soviets are supplying the Cubans with cryptographic materials that 
are used for their diplomatic and intelligence traffic — impossible to break and 
read. If I could get the code clerk recruited, they said, arrangements could be 
made to have a headquarters technician copy the materials ('one-time' pads) for 
safe return to the code-room. Traffic afterwards, and perhaps traffic before — now 
stored by the National Security Agency for eventual breakthrough — could be 
read. 

Miami 14 March 1964 

We divided our home leave between Janet's parents' home in Michigan and 
mine here in Florida. Two weeks ago another son was born, right on the day 
calculated by the doctor many months ago. Such joy — again everything went 
perfectly. When the new baby is able to travel in a few weeks, Janet and the 
children will fly to Montevideo, but I'm going now because the officer I'm 
replacing is in a rush to leave. 

On my way down to Montevideo I've stopped off here and spent most of 
today discussing ways the JMWAVE (Miami) station can help our programme 
against the Cubans in Montevideo. Charlie McKay, J the JMWAVE officer who 
met me at the airport, suggested we spend the day discussing matters at the beach 
instead of at the station offices at Homestead Air Force Base so we relaxed in the 
sun until he finally brought me back to the airport. He was just the right person 
for these discussions because he was assigned to the Montevideo station in the 
early 1960s and is familiar with the operations there. 

Miami CIA operations are vast but mainly, it seems, concerned with refugee 
debriefmgs, storage and retrieval of information, and paramilitary infiltration- 



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exfiltration operations into Cuba. They have both case officers and Cuban exile 
agents who can assist hemisphere stations on temporary assignments for 
recruitments, transcribing of audio operations and many other tasks. Just recently 
the Montevideo station proposed that JMWAVE attempt to locate a woman who 
could be dangled before the Cuban code clerk, who is exceptionally active in 
amorous adventures. According to McKay they have just come up with the 
candidate — a stunning Cuban beauty who has done this sort of work before. Next 
week he will forward biographical data and an operational history on her, 
together with the photograph he showed me, to the Montevideo station. 

The main Miami operation related to Uruguay, however, is the AMHALF 
project involving three Uruguayan diplomats assigned in Havana. They are the 
Charge d' Affaires, Zuleik Ayala Cabeda, J and two diplomats: German Roosen, 
J the Second Secretary, and Hamlet Goncalves, J the First Secretary. No one of 
them is supposed to know that the others are working for the CIA but the Miami 
station suspects they have been talking to each other. Their tasks in Havana 
include arranging for asylum for certain Cubans, loading and unloading dead 
drops used by other agents, currency purchase and visual observation of certain 
port and military movements. Communications to the agents from Miami are 
through the One- Way- Voice-Link (radio) but every week or two at least one of 
them goes to Nassau or Miami on other tasks unrelated to the CIA, such as 
bringing out hard currency and jewels left behind by Cuban exiles. Such 
contraband serves as cover for their CIA work but adds to the sensitivity of this 
operation — already extreme because of the implications of using diplomats 
against the country to which they're accredited. The Department of State would 
have no easy time making excuses to the Uruguayan government if this operation 
were to blow. 

Montevideo 15 March 1964 

This is a marvellous city — no wonder it's considered one of the plums of WH 
Division. Gerry O'Grady, J the Deputy Chief of Station, met me at the airport and 
took me to the Hotel Lancaster in the Plaza de la Libertad where I stayed when I 
came last year. We then went over to his apartment, a large seventh-floor spread 
above the Rambla overlooking Pocitos beach, where we passed the afternoon 
exchanging experiences. O'Grady came in January but his family won't be down 
until after the children finish school in June. He's another of the transfers from 



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the Far East Division — previous assignments in Taipei and Bangkok. Very 
friendly guy 

Montevideo 18 March 1964 

Moving from the next-to-the smallest country in South America to the 
smallest is nevertheless taking several giant steps forward in national 
development, for contrast, not similarity, is most evident. Indeed Uruguay is the 
exception to most of the generalities about Latin America, with its surface 
appearance of an integrated society organized around a modern, benevolent 
welfare state. Here there is no marginalized Indian mass bogged down in terrible 
poverty, no natural geographic contradictions between coastal plantations and 
sierra farming, no continuum of crises and political instabilities, no illiterate 
masses, no militarism, no inordinate birth-rate. In Uruguay I immediately 
perceive many of the benefits that I hope will derive from the junta's reform 
programme in Ecuador. 

Everything seems to be in favour of prosperity in Uruguay. The per capita 
income is one of the highest in Latin America at about 700 dollars. Ninety per 
cent of the population is literate with over ten daily newspapers published in 
Montevideo alone. The country is heavily urban (85 per cent) with over half the 
2.6 million population residing in Montevideo. Health care and diet are 
satisfactory while social-security and retirement programmes are advanced by 
any standards. Population density is only about one third of the Latin American 
average and population growth is the lowest — only 1.3 per cent. Most important, 
Uruguay's remarkable geography allows for 88 per cent land utilization, most of 
which is dedicated to livestock grazing. Here we have a model of political 
stability, almost no military intervention in politics in this century, and well- 
earned distinction as the 'Switzerland of America'. 

Uruguay's happy situation dates from the election in 1903 of Jose Batlle y 
Ordonez, certainly one of the greatest and most effective of Western liberal 
reformers, who put an end to the violent urban-rural struggle that plagued 
Uruguay, as in much of Latin America, during the nineteenth century. To Batlle, 
Uruguayans owe social legislation that was as advanced as any of its time; eight- 
hour day; mandatory days of rest with pay each week; workers' accident 
compensation; minimum wage; retirement and social security benefits; free, 
secular, state-supported education. In order to set the pace in workers' benefits 



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and to check concentration of economic power in the hands of private foreign 
and national interests, Batlle established government monopolies in utilities; 
finance and certain commercial and industrial activities. And in the political order 
Batlle established the principle of co-participation wherein the minority Blanco 
Party (also known as the National Party) could share power with Bathe's own 
Colorado Party through a collegiate executive that would include members of 
both parties. Through this mechanism patronage would be shared, fringe parties 
excluded and bloody struggles for political control ended. It is to Batlle, then, 
that Uruguayans attribute their political stability, their social integration, and an 
incomes redistribution policy effected through subsidies, the social welfare 
system, and the government commercial, financial and utility monopolies. 

However, since about 1954 the standard of living in Uruguay has been 
falling, the GDP has failed to grow, productivity and per capita income have 
fallen, and industrial growth has fallen below the very low population growth 
rate. Investment is only about 11 per cent of GDP, an indication, perhaps, of 
Uruguayans' resistance to lowering their accustomed levels of consumption. 
Nevertheless, declining standards of living of the middle and lower classes have 
produced constant agitation and turmoil reflected in the frequent, widespread and 
crippling strikes that have come to dominate national life. 

What has happened in this most utopic of modern democracies? The 
economic problem since the mid-1950s has been how to offset the decline of 
world prices for Uruguay's principal exports: beef, hides and wool. Because 
export earnings have fallen — they're below the levels of thirty years ago — 
Uruguay's imports have been squeezed severely with rising prices of 
manufactured and intermediate goods used in the substitution industries 
established during the Depression and the 1945-55 prosperity. Result: inflation, 
balance-of-payments deficits, economic stagnation, rising unemployment (now 
12 per cent), currency devaluation. 

In part Uruguay's problems are inevitable because recent prosperity was 
based on the unusual seller's market during World War II and the Korean War. 
However, the problems have been aggravated by certain government policies, 
particularly the creation of new jobs in the government and its enterprises in 
order to alleviate unemployment and to generate political support. Because of the 
'three-two system' for distribution of government jobs (three to majority party 
appointees and two to minority appointees) established during the 1930s, one 
could fairly say that both parties are at fault for the current top-heavy 



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administration. Indeed government employees grew from 58,000 in 1938 to 
170,000 in 1955 to about 200,000 now. Because of attractive retirement and 
fringe benefits the belief prevails that everyone has a right to a government job — 
although salaries trail so far behind inflation that most government employees 
need more than one job to survive. But the overall result has been deficit 
financing for a public administration often criticized for ineptitude, slow action, 
interminable paper-work, high absenteeism, poor management, low technical 
preparation and general corruption. 

Uruguay's system of paying for its state- employment welfare system is to 
retain a portion of export earnings through the use of multiple currency-exchange 
rates. Thus the exporter is paid in pesos by the central bank at a rate inferior to 
the free market value of his products with the retention being used by the bank 
for government operations. This system of retentions is at once a means for 
income redistribution and the equivalent of an export tax damaging to the 
competitiveness of the country's products in international markets. Retentions 
also serve as a disincentive to the primary producing sector, the cattle and sheep 
ranchers, who resist taxation to support the Montevideo government bureaucracy 
and the welfare system. The result in recent years has frequently been for 
ranchers to withhold wool and cattle from the market or to sell their products 
contraband — usually across the unguarded border to southern Brazil. 

The contradiction between rural and urban interests, aggravated by decline in 
export earnings, resulted in Uruguay's falling productivity and declining standard 
of living. In 1958, after almost 100 years in opposition, the Blanco Party won the 
national elections in coalition with a rural pressure group known as the Federal 
League for Ruralist Action or Ruralistas. This coalition instituted programmes to 
favour exports of ranching products but with little success at first. In 1959 major 
international credit was needed for balance-of-payments relief, and at the 
insistence of the International Monetary Fund fiscal reforms were adopted in the 
hope of stabilizing inflation, balancing trade and stimulating exports. The peso 
was devalued, retentions on exports lightened, import controls established and 
consumer and other subsidies curtailed. The recovery programme failed, 
however, partly because industrial import prices continued to rise while inflation 
and other ills have also continued. The peso, which was devalued from 1.5 to 6.5 
per dollar in 1959, has continued to fall and is now down to about 18 per dollar. 
The cost-of-living increase, a not extreme 15 per cent in 1962, went up by 33-5 
per cent in 1963. In spite of continued economic decline, however, the Blancos 



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were able to retain control of the executive in the 1 962 elections, largely because 
of new government jobs created before the elections. 

Perhaps more fundamental than the disincentives to ranchers and other 
contradictions in the income redistribution policies is the dilution of Uruguayan 
political power. The collegiate executive, conceived as a power-sharing 
arrangement between the two major parties and as a safeguard against usurpation 
of excessive authority, consists of nine members, six from the majority party and 
three from the minority party. In practice, however, the National Council of 
Government has many of the appearances of a third legislative chamber because 
of the factionalism in the major parties promoted by the electoral system. The 
current NCG, for example, consists of three members from one Blanco faction, 
two from another and one from a third faction. The Colorado minority members 
are similarly divided: two from one faction and one from another. Thus five 
separate factions are represented on the executive, each with its own programme 
and political organization. Ability of the executive to lead and to make decisions 
is considerably limited and conditioned by fluctuating alignments of the factions, 
often across party lines, on different issues. 

The Legislature is similarly atomized and moreover self-serving. A special 
law allows each senator and deputy to import free of duty a new foreign 
automobile each year which at inflated Uruguayan prices means an automatic 
double or triple increase in value. Legislation in 1961 similarly favoured 
politicians, providing for privileged retirement benefits for political 
officeholders, special government loans for legislators and exceptionally 
generous arrangements for financing legislators' homes. 

What are some of the solutions to this country's problems when already they 
have so much going in their favour? Some degree of austerity is necessary, but 
reforms are also needed in the government enterprises, the ranches, and, most of 
all, in the executive. 

The twenty-eight government enterprises, commonly known as the 
autonomous agencies and decentralized services, are noted for inefficiency, 
corruption and waste. For such a small country the scope of their operations is 
vast: railways, airlines, trucking, bus lines, petroleum refining and distribution, 
cement production, alcohol production and importation, meat packing, insurance, 
mortgage and commercial banking, maritime shipping, administration of the port 
of Montevideo, electricity, telephones and telegraphs, water and sewerage 
services. Improved management and elimination of waste and corruption in the 



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Central Administration — the various ministries as opposed to the autonomous 
agencies and decentralized services — is without doubt equally important. 

In the ranching sector two major problems must be solved: concentration of 
land and income, and low capital and technology. On land concentration, some 5 
per cent of the units hold about 60 per cent of the land while about 75 per cent of 
the units hold less than 10 per cent of the land — the latifundia-minifundia 
problem escaped Bathe's attention. Over 40 per cent of the land, moreover, is 
exploited through some form of precarious tenure with the corresponding 
disincentive to capitalize. Clearly the large landholdings must be redistributed in 
order to intensify land use both for production and employment. 

As for the executive, commentary has started on constitutional reform such 
as a return to the one-man presidency or perhaps retention of the collegiate 
system but with all members elected from the same party. 

No one seems to know just how Uruguay will solve these problems but all 
agree that the country is in an economic, political and moral crisis. 

Montevideo 21 March 1964 

The Montevideo station is about medium-sized as WH stations go. Besides 
the Chief of Station, Ned Holman, J and O'Grady, we have four operations 
officers (one each for Soviet operations, communist party and related groups, 
covert-action operations and Cuban operations), a station administrative assistant, 
two communications officers and three secretaries — all under cover in the 
Embassy political section. On the outside under non-official cover we have two 
US citizen contract agents who serve as case officers for certain FI and CA 
operations. 

Uruguay's advanced state of development, as compared with Ecuador, is 
clearly reflected in the station's analysis of the operational environment which is 
much more sophisticated and hostile than in poor and backward surroundings. 
Although there are similarities in the stations' targets the differences are mostly 
the greater capability of the enemy here. 

The Communist Party of Uruguay (PCU) 

In contrast to the divided, weak and faction-ridden Communist Party of 
Ecuador, the PCU is a well organized and disciplined party with influence far 



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beyond its vote-getting ability. Thanks in part to the electoral system (the ley de 
lemas) the PCU has only minimal participation in the national legislature: three 
seats of a total of 130. The party's strength is growing, however, largely because 
of the deteriorating economic situation. Whereas in the 1958 elections the PCU 
received 27,000 votes (2.6 per cent), in 1962 they received 41,000 (3.5 per cent). 
Station estimates of PCU are also rising: from an estimated 3000 members in 
1962 to about 6000 at the present — still less than the PCU claim of membership 
in excess of 10,000. 

The PCU's political activities are largely channelled through its political 
front: the Leftist Liberation Front, better known as FIDEL (for Frente Izquierda 
de Liberacion). Besides the PCU, FIDEL includes the Uruguayan Revolutionary 
Movement (MRO) and several small leftist splinter groups. Ariel Collazo, the 
principal leader of the MRO, holds a seat in the Chamber of Deputies which, 
with the three PCU seats, brings FIDEL congressional representation to four. 

Uruguay's exceptionally permissive political atmosphere allows free reign for 
the PCU's activities in labour and student organizations as well as in the political 
front. The party's newspaper, El Popular, is published daily and sold throughout 
Montevideo — a fairly effective propaganda vehicle for the PCU's campaigns 
against' North American imperialism' and the corruption of the traditional 
Uruguayan bourgeois parties. While many communist parties are increasingly 
rocked with splits along the Soviet- Chinese model, the PCU is only minimally 
troubled and maintains unwavering support for the Soviets. Support for the 
Cuban revolution and opposition to any break in relations with Cuba are principal 
PCU policies. 

The Uruguayan Workers Confederation (CTU) 

Throughout its forty-odd years of existence the PCU has been active in the 
Uruguayan labour movement, peaking in 1947 when the party controlled the 
General Union of Workers which represented about 60 per cent of organized 
labour. Following the death of Stalin, however, ideological division led to a 
decline in PCU trade-union influence while the rival Uruguayan Labor 
Confederation J (CSU), backed by the Montevideo station, became the 
predominant organization. The CSU affiliated with ORIT f and the ICFTU, \ but 
began to decline when the Uruguayan Socialist Party withdrew support and the 
PCU renewed its organizational efforts. In the early 1960s under PCU leadership 



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the CTU was formed, and it has now become by far the largest and most 
important Uruguayan trade-union organization. Besides PCU leadership in the 
CTU, left-wing socialists are also influential. 

Major policies of the CTU are support for the Cuban revolution and 
opposition to government economic policies, particularly the reform measures 
adopted at the insistence of the International Monetary Fund (devaluation, 
austerity) that hurt the lower-middle and low income groups. While only a small 
percentage of the workers are communists (most workingmen vote for the 
traditional parties), the PCU and other extreme-left influence in the CTU allows 
for mobilization of up to several hundred thousand workers, perhaps half the 
entire labour force, what with the prevalence of legitimate grievances. Action 
may range from sitdown or slowdown strikes of an hour or two, to all-out 
prolonged strikes paralysing important sectors of the economy. As should be 
expected, the CTU is an affiliate of the Prague-based World Federation of Trade 
Unions. 

The Federation of University Students of Uruguay (FEUU) 

The situation in the national student union is similar to the labour movement: 
communists are a small minority of the student population but control the 
federation. There are two institutions of higher learning in Uruguay, the 
University of the Republic with an enrollment of about 14,000 and the National 
Technical School (Universidad de Trabajo) with about 18,000, both in 
Montevideo. FEUU activities, however, are concentrated at the University of the 
Republic but extend into the secondary system. A PCU member is Secretary- 
General of FEUU, and, when a cause is presented, large numbers of students can 
be mobilized for militant street action and student strikes. Campaigns of the 
FEUU include support for the Cuban revolution and CTU demands, and attacks 
against' North American imperialism'. 

The Socialist Party of Uruguay (PSU) 

Although the pro-Castro PSU is waning as a political force in Uruguay — in 
the 1 962 elections they were shut out of national office for the first time in many 
years — it retains some influence among intellectuals, writers and trade unionists. 
A considerable part of the Socialists' problem is internal dissention over peaceful 
versus violent political action. A portion of PSU militants under Raul Sendic, the 
leader of the sugar workers from Bella Union in northern Uruguay, have broken 



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away and formed a small, activist revolutionary organization. They continue to 
be weak, however, and Sendic is a fugitive believed to be hiding in Argentina. 

The Uruguayan Revolutionary Movement (MRO) 

Although the MRO participates in FIDEL with the PCU, it retains its 
independence and a much more militant political posture than the PCU. Because 
it is dedicated to armed insurrection it is considered dangerous, but it is thought 
to have no more than a few hundred members which considerably limits its 
influence. 

Trotskyist and Anarchists 

The Revolutionary Workers Party (POR) under Luis Naguil is the Trotskyist 
group aligned with the Posadas faction of the Fourth International. They number 
less than one hundred and their influence is marginal. A similarly small number 
of anarchists led by the Gatti brothers, Mauricio and Gerardo, operate in 
Montevideo, but they too merit only occasional station coverage. 

Argentine Exiles 

Uruguay, with its benevolent and permissive political climate, is a traditional 
refuge for political exiles from other countries, especially Argentina and 
Paraguay. Since the overthrow of Peron in 1955 Montevideo has been a safe 
haven for Peronists whose activities in Argentina suffer from periods of severe 
repression. The Buenos Aires station is considered rather weak in penetration 
operations against the Peronists particularly those on the extreme left. The 
Montevideo station, therefore, has undertaken several successful operations 
against Peronist targets in Uruguay through which Cuban support to Peronists 
has been discovered. One operation, an audio penetration of the apartment of 
Julio Gallego Soto, an exiled Peronist journalist, revealed a clandestine 
relationship between Gallego and the former chief of Cuban intelligence in 
Montevideo, Earle Perez Freeman — the would-be defector in Mexico City. Our 
station, in fact, has made the most important analysis of the complicated 
arrangement of groups within Peronism — those of CIA interest are termed Left- 



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Wing Peronists and Argentine Terrorists' — but current signs are that the 
Argentine government is to allow Peronists to return, and much Argentine 
revolutionary activity will soon begin moving back to Buenos Aires. 

Paraguayan Exiles 

To an even greater extent than the Argentine extremists, the Communist Party 
of Paraguay (PCP) is forced to operate almost entirely outside its own country 
Based mainly in Buenos Aires, Montevideo and Sao Paulo, the PCP is largely 
ineffectual with only about 500 of its three to four thousand members living in 
Paraguay Harassment and prison for PCP activists under the Stroessner 
government is most effective. Nevertheless, the PCP has formed a political front, 
the United Front for National Liberation (FULNA), which includes some non- 
communist participation — mainly from the left wing of the Paraguayan Liberal 
Party and from the Febrerista movement, neither of which is allowed to operate 
in Paraguay. FULNA headquarters is in Montevideo. 

The Soviet Mission 

The Soviet Mission in Montevideo consists of the Legation, the Commercial 
Office and the Tass representative. About twenty officers are assigned to the 
Legation of whom only eight are on the diplomatic list of the Uruguayan Foreign 
Ministry with the rest listed as administrative and support officials. Of the twenty 
officers in the Embassy, twelve are known or suspected to be intelligence 
officers: six known and two suspect KGB (state security), and two known and 
two suspect GRU (military intelligence). The Commercial Office, located in a 
separate building that is also used for Soviet Mission housing, consists of five 
officers of whom two are known and one is suspect KGB. The Tass 
representative is known KGB. Thus of twenty-six Soviets in Montevideo sixteen 
are known or suspected intelligence officers, about the average for Soviet 
missions in Latin America. 

Targets for Soviet intelligence operations in Uruguay, other than the US 
Embassy and the CIA station, are fairly obvious although station operations have 
failed to turn up hard evidence except in rare circumstances. Thought to be high 
on the Soviet priority list are support to the PCU and CTU, penetration of the 
Uruguayan government and the leftist factions of traditional political parties 



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through their 'agents of influence' programmes, propaganda publishing and 
distribution throughout Latin America through the firm Ediciones Pueblos 
Unidos among others, cultural penetration through various organizations 
including the Soviet-Uruguayan Friendship Society, travel support through the 
Montevideo office of Scandinavian Airlines System, and support for 'illegal' 
intelligence officers sent out under false nationalities and identities. 

The Cuban Mission 

Like the Soviets, the Cubans have an Embassy and separate Commercial 
Office, but Prensa Latina, the Cuban wire service, is operated by Uruguayans and 
Argentines. The Embassy is headed by a Charge d'Affaires with four diplomats, 
all either known or suspected intelligence officers. The Commercial Office is 
operated by a Commercial Counsellor and his wife, both of whom are thought to 
be intelligence officers. Contrary to Agency operations against the Soviets, 
however, there is no known framework for classifying Cuban intelligence 
operations, and practically nothing is known about the organizational structure of 
Cuban intelligence. 

Nevertheless, the Montevideo station has collected valuable information on 
Cuban involvement with Argentine revolutionaries, and strong indications exist 
that the Cubans are providing support from their Montevideo Embassy to current 
guerrilla operations in northern Argentina. Other Cuban activities relate to the 
PCU, CTU, FEUU, artists, intellectuals, writers and leftist leaders of the 
traditional parties. 

Other Communist Diplomatic Missions 

Czechoslovakia, Poland, Bulgaria, Hungary, Romania and Yugoslavia also 
have diplomatic missions in Montevideo. The Czechs are considered the most 
important from a counter-intelligence viewpoint, but station personnel limitations 
preclude meaningful operations against any of these other communist missions. 

There is also an East German trade mission. Because of the higher priorities, 
we don't cover their activities closely and the Chief of Station is trying through 
the Minister of the Interior to have them expelled. 

As I read the files and briefing materials on Uruguay it becomes clear that 
the operational climate here, with the Soviet, Cuban and Czech intelligence 



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services, and a sophisticated local political opposition in the PCU and related 
organizations, is rather less relaxed than in Ecuador. Care will have to be taken in 
operational security, especially in agent meetings and communications. 
Nevertheless, as Uruguayans are generally well disposed to the US, and because 
the station has a close relationship with the police and other security forces, the 
operational climate is generally favourable. 

Montevideo 22 March 1964 

Until about a year ago the Montevideo station had the typical anti-communist 
political operations found at other hemisphere stations, the most important of 
which were effected through Benito Nardone, J leader of the Federal League for 
Ruralist Action, and President of Uruguay in 1 960-6 1 . Other operations were 
designed to take control of the streets away from communists and other leftists, 
and our squads, often with the participation of off-duty policemen, would break 
up their meetings and generally terrorize them. Torture of communists and other 
extreme leftists was used in interrogations by our liaison agents in the police. An 
outstanding success among these operations was the expulsion, in January 1961, 
just before Nardone's term as NCG President ended, of the Cuban Ambassador, 
Mario Garcia Inchaustegui, together with a Soviet Embassy First Secretary, for 
supposedly meddling in Uruguayan affairs. The station's goal, of course, had 
been a break in diplomatic relations but resistance was too strong among other 
members of the NCG. 

These operations had been expanded, much as the ECACTOR operations in 
Ecuador, under Tom Flores J who arrived in 1960 as Chief of Station. However, 
when Ambassador Wymberly Coerr arrived in 1962, he insisted that Flores put an 
end to political intervention with Nardone and to the militant action operations 
which had caused several deaths and given the communists convenient victims 
for their propaganda campaigns against the 'fascist' Blanco government. Flores 
resisted, and in 1963 Ambassador Coerr arranged to have him transferred and the 
objectionable operations ended. Holman was sent to replace Flores, but he has 
maintained a discreet communication with Nardone, only for intelligence 
collection and without political-action implications. At this moment Nardone is 
in the terminal stages of cancer and for all practical purposes operations with him 
have ended. 



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The rest of the station operational programme, however, covers all areas. 
First the Related Missions Directive: 

PRIORITY A 

Collect and report intelligence on the strength and intentions of communist 
and other political organizations hostile to the US, including their international 
sources of support and guidance. 

Objective 1: Establish operations designed to effect agent and/or technical 
penetrations of the Cuban, Soviet and other communist missions in Uruguay. 

Objective 2: Effect agent and/or technical penetrations at the highest possible 
level of the Communist Party of Uruguay, the Communist Youth of Uruguay, the 
Leftist Liberation Front (FIDEL), the Uruguayan Workers' Confederation, the 
Socialist Party of Uruguay (revolutionary branch), the Federation of University 
Students of Uruguay, the Uruguayan Revolutionary Movement (MRO) and 
related organizations. 

Objective 3: Effect agent and/or technical penetrations of the Argentine 
terrorist and leftist Peronist organizations operating in Uruguay, the Communist 
Party of Paraguay, the Paraguayan United Front for National Liberation 
(FULNA) and other similar third-country organizations operating in Uruguay. 

PRIORITY B 

Maintain liaison relations with the Uruguayan security services, principally 
the Military Intelligence Service and the Montevideo Police Department. 

Objective 1: Through liaison services maintain intelligence collection 
capabilities to supplement station unilateral operations and to collect information 
on Uruguayan government policies as related to US government policies and to 
the communist movement in Uruguay. 

Objective 2: Maintain an intelligence exchange programme with liaison 
services in order to provide information on communist and related political 
movements in Uruguay to the Uruguayan government, including when possible 
information from unilateral sources. 



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Objective 3: Engage in joint operations with Uruguayan security services in 
order to supplement station unilateral operations and to improve the intelligence 
collection capabilities of the services. 

Objective 4: Through training, guidance and financial support attempt to 
improve the overall capabilities of the Uruguayan security services for collection 
of intelligence on the communist movement in Uruguay. 

PRIORITY C 

Through covert-action operations: (1) disseminate information and opinion 
designed to counteract anti-US or pro-communist propaganda; (2) neutralize 
communist or extreme-leftist influence in principal mass organizations or assist 
in establishing and maintaining alternative organizations under non-communist 
leadership. 

Objective 1: Place appropriate propaganda through the most effective local 
media, including press, radio and television. 

Objective 2: Support democratic leaders of labour, student and youth 
organizations, particularly in areas where communist influence is strongest (the 
Federation of University Students of Uruguay, the Uruguayan Workers' 
Confederation) and where democratic leaders may be encouraged to combat 
communist subversion. 

Foreign Intelligence and Counter-intelligence Operations (FI-CI) 

AVCAVE. Of the four agent penetrations of the Communist Party of 
Uruguay, AVCAVE- 1 J is the most important, classified as 'middle-level' while 
the others are' low-level'. The station's very limited success in running agents into 
the PCU in comparison with other countries, Ecuador, for example, is due in 
large part to the higher standard of living and welfare system: Uruguayan 
communists simply are not as destitute and harassed as their colleagues in poorer 
countries and thus are less susceptible to recruitment on mercenary terms. Of 



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equal if not greater importance are the higher level of political sophistication in 
Uruguay, superior party leadership, minimal internal party dissension and the 
growth the party has experienced in recent years — there may even be a flicker of 
revolutionary hope given the mess the traditional parties are making of the 
country 

Not that the station hasn't tried to get a 'high-level' agent. Periodic letter 
recruitment campaigns and approaches by 'cold pitch' in the streets have been 
undertaken regularly but without success. AVCAVE-l's access derives from his 
membership of one of Montevideo's district committees and his close relation 
with an incipient pro-Chinese faction. His position enables the station to 
anticipate some PCU policies but he is far from the power locus of the 
Secretariat. Of some interest, however, is AVCAVE-l's guard duty at PCU 
headquarters. 

AVPEARL. For many months Paul Burns,; the case officer in charge of 
operations against the PCU, has been studying ways to bug the conference room 
at PCU headquarters where meetings of the Secretariat and other sensitive 
conversations are held. Through AVOIDANCE-9, J one of the low-level 
penetration agents who is occasionally posted to guard duty at PCU headquarters, 
the station has obtained clay impressions of the keys to the conference room from 
which duplicate keys have been made. However, the twenty-four-hour guard 
service at PCU headquarters renders an audio installation in the conference room 
almost impossible by surreptitious entry. 

AVOIDANCE-9 has also photographed the electrical installations in the 
conference room, which the guards check on their rounds of the building, and the 
station pouched to Washington identical electrical sockets of the bulbous, 
protruding type used in Uruguay. The Technical Services Division in 
headquarters is casting bugs (microphone, carrier-current transmitter and 
switches all subminiaturized) into identical porcelain wall sockets of their own 
manufacture. The Minox photographs of the conference-room sockets were also 
needed so that the slightest details of painted edges and drops can be duplicated 
on the bugs being cast at headquarters. Installation will consist simply in 
removing the current sockets and replacing them with those cast by TSD. If 
successfully installed the stereo audio signal will be transmitted down the electric 
power line as far as the first of the large transformers usually located on utility 
poles. 



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A study of the power lines has also been made in order to determine which 
apartments and houses are between the target building and the first transformer. 
One of these locations will have to be acquired as Listening Post because radio 
frequency (RF) signals cannot pass through the transformer. Several agents 
already tested in support operations are being considered for manning the LP. 
AVOIDANCE-9, however, has been kept as unaware as possible of the true 
nature of this operation because he is extremely mercenary, and there is some 
concern that he might use his knowledge of the installation, if he made it, to 
blackmail the station later. Thus AVCAVE- 1 , J whose loyalty is of a higher type, 
was instructed to volunteer for guard duty and he too is now spending one or two 
nights per month in a position to make the AVPEARL installation. At this 
moment the station is awaiting the devices from headquarters for testing before 
installation. 

AVBASK. The station's only penetration of the Uruguayan Revolutionary 
Movement (MRO) is Anibal Mercader, J a young bank employee developed and 
recruited by Michael Berger, f the officer whom I am replacing. The agent's 
information is generally low-to-middle-level because he is some distance from 
the MRO leadership. He is well motivated, however, and there is some hope that 
he could rise within this relatively small organization. Nevertheless, as the MRO 
is terrorist-oriented there may be a problem over how far the agent should go, 
even if willing, in carrying out really damaging activities for his organization. 
The agent, moreover, is torn between emigrating to the US (where his banking 
talents could provide a decent income) and remaining in Uruguay where he faces 
only turmoil and strain. 

AVBUTTE. This is the support and administrative project for all matters to 
do with a US citizen who is working under contract as an operations officer. His 
name is Ralph Hatry J and he is involved in FI operations. His cover is that of 
Montevideo representative for Thomas H. Miner and Associates, } a Chicago- 
based public relations and marketing firm. Hatry, who is about sixty years old, 
has a long history of work with US intelligence, including an assignment in the 
Far East under cover of an American oil company. The immediate background to 
his assignment to Montevideo was a difficult contract negotiating period, in 
which Gerry O'Grady, the Deputy Chief of Station, was involved, and which 
revealed Hatry to be a very difficult person but with important sponsor. The 



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Assistant DDP, Thomas Karamessines, J gave instructions to find Harry a job 
somewhere and his file was circulated, eventually landing on the Uruguayan 
desk. 

Hatry came to Montevideo last year and has been causing problems 
continuously, for the most part related to his personal finances and his efforts to 
increase fringe benefits. Holman, the Chief of Station, is trying to keep as much 
distance as possible between Hatry and himself — the opposite of Hatry's efforts. 
Because Berger is the junior officer in the station he was assigned to incorporate 
Hatry into his operations and to handle his needs in the station, and as is often the 
case with officers under nonofficial cover, the time involved in solving his 
problems inside the station practically wipes out the advantage of having him in 
the field. Nevertheless, Hatry is handling four operations: a letter intercept, an 
exiled Paraguayan leader, several penetration agents of the Paraguayan 
Communist Party and FULNA, and an observation post at the Cuban Embassy. 

AVBALM. The contact in this operation is Epifanio Mendez Fleitas, the 
exiled leader of the Paraguayan Colorado Party. Although the Colorado Party 
provides the political base for the Stroessner dictatorship, Mendez Fleitas' past 
efforts to promote reform and to unite Colorados against Stroessner have earned 
him a position of leadership in the exile community. He is chiefly dedicated to 
writing and to keeping together his Popular Colorado Movement (MOPOCO) 
which he formed several years ago. We keep this operation going in Montevideo 
in order to assist the Asuncion station and headquarters in following plotting by 
Paraguayan exiles against General Stroessner. 

AVCASK. This operation is also targeted against Paraguayan exiles, 
specifically the Communist Party of Paraguay (PCP) and FULNA, The principal 
agent, AVCASK- 1, J is active in a leftist group within the Paraguayan Liberal 
Party, and he reports on leftist trends within the party while serving as cutout and 
agent-handler for two lesser agents, AYCASK-2 $ and AYCASK-3. J 
AVCASK-2 is also a Liberal Party member but he works in FULNA and reports 
to AVCASK- 1 on FULNA and PCP work in FULNA. AVCASK-3 is a PCP 
member who is currently moving into a paramilitary wing that is preparing for 
armed action against the Stroessner government. Only AVCASK- 1, of these three 
agents, knows that CIA is the sponsor of the operation and he uses his own 
Liberal Party work as cover for the instructions and salaries he pays the other 



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two. Yearly cost of this project is about five thousand dollars. Hatry meets with 
AVCASK- 1 and reports back to Michael Berger. 

AVIDITY. The station letter intercept provides correspondence from the 
Soviet bloc, Cuba, Communist China and certain other countries according to 
local addressee. The principal agent is AVANDANA, J an elderly man of many 
years' service going back to Europe during World War II. He receives the letters, 
which come from AVIDITY-9 J and AVIDITY- 16, $ both of whom are 
employees of Montevideo's central post office. AVANDANA meets one of the 
sub-agents each day, receiving and returning the correspondence. Payment is 
made on the basis of the numbers of letters accepted. 

The letters are processed by AVANDANA at his home, where he has photo 
equipment and a flat-bed steam table. He writes summaries of the letters of 
interest which he passes with microfilm to Hatry who passes them to Berger. This 
operation costs about 10,000 dollars per year. 

AVBLINKER. When the station decided to set up an observation post in 
front of the Cuban Embassy it was decided to man the OP with AVENGEFUL-7, 
J who is the wife of AVANDANA, his assistant in the AVIDITY letter intercept, 
and an occasional transcriber for the AVENGEFUL telephone-tapping operation. 
The OP is in a large house across the street from the Embassy in the elegant 
Carrasco section of Montevideo. The station pays the rent for AVBLINKER- 1 
and 2, an American couple who live in the OP house (the husband is employed 
by an Uruguayan subsidiary of an American company) and AVENGEFUL-7 
spends each day in an upstairs front-room taking photographs of persons entering 
and leaving, and maintaining a log with times of entry and exit and other 
comment that she reconciles with the photographs which are processed by 
AVANDANA. AVENGEFUL-7's work with US intelligence also goes back to 
World War II days when she worked behind enemy lines in Europe. 

In addition to the logs and photographs, AVENGEFUL-7 also serves as a 
radio base for the AVENIN surveillance team which works most of the time on 
Cuban targets. From the Op she signals by radio when the subject to be followed 
leaves the Embassy — with different signals if by foot, by car, or by one street or 
another. The team waits in vehicles four or five blocks away and picks up the 
subject. The logs and photographs are passed to Hatry who also passes back 
instructions on surveillance targets. 



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AVENIN. The station has two surveillance teams, the oldest and most 
effective being the AVENIN team directed by Roberto Musso. J The team 
consists of seven surveillance agents, one agent in the state-owned electric 
company, and one agent in the telegraph company who provides copies of 
encoded telegrams sent and received by the Soviet bloc missions through 
commercial wire facilities. Most of the surveillance agents, like Musso, are 
employees of the Montevideo municipal government, and communications and 
instructions are passed by Paul Burns, the case officer in charge, at a safe office 
site a block from the municipal palace. 

The team is well trained and considered to be one of the best unilateral 
surveillance teams in WH Division. Vehicles include two sedans and a 
Volkswagen van equipped with a periscope photography rig with a 360-degree 
viewing capability for taking pictures and observations through the roof vent. 
Concealed radio equipment is also used for communication between the vehicles, 
between the vehicles and the OP at the Cuban Embassy, and between the vehicles 
and the people on foot. These carry small battery-operated transmitter-receivers 
under their clothing and can communicate with each other as well as with the 
vehicles. They are also trained and equipped for clandestine street photography 
using 35-mm automatic Robot cameras wrapped to form innocuous packages. 

The AVENIN team was formed in the mid-1950s with the original nucleus of 
agents coming from part-time police investigators. Until last year, when a new, 
separate team was formed, the AVENIN team was almost constantly assigned to 
follow Soviet intelligence officers or related targets. Their most sensational 
discovery was a series of clandestine meetings between an official of the 
Uruguayan Foreign Ministry and a Soviet KGB officer in which all the 
clandestine paraphernalia of signals and dead drops had been used. Photographs 
and other evidence passed by the station to Uruguayan authorities led to 
expulsion of the Soviet officer and considerable propaganda benefit. Last year, 
however, the AVENIN team was taken off Soviet targets and assigned to the 
Cubans, partly because of increasing importance of the Cubans and partly 
because the team was considered to be fairly well blown to the Soviets. 

The AVENIN agent in the electric company is valuable because he has access 
to lists of persons who are registered for electric service at any address in 
Montevideo. Not only are the lists helpful in identifying the apartments or offices 
where surveillance subjects are followed, but the lists are also used to check 
building security of potential safe sites. The same agent also provides on request 



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the architect's plans for any building served by the electric company and these 
plans are used for planning audio installations or surreptitious entries for other 
purposes. The same agent, moreover, can be called upon to make routine 
electrical inspection visits, ostensibly for the electric company, which gives him 
access to practically any office, apartment or house in Montevideo for inside 
casings. 

AVENGEFUL. The station telephone-tapping operation is effected through 
the AVALANCHE liaison service (the Montevideo Police Department) with a 
history dating back to World War II when the FBI was in charge of counter- 
intelligence in South America. This is currently the most important joint 
operation underway between the station and an Uruguayan service. Connections 
are made in telephone company exchanges by company engineers at the request 
of the police department. A thirty-pair cable runs from the main downtown 
exchange to police headquarters where, on the top floor, the listening post is 
located. 

The chief technician, Jacobo de Anda, J and the assistant technician and 
courier, Juan Torres, J man the LP, which has tables with actuators and tape- 
recorders for each of the thirty pairs. Torres arranges for lines to be connected by 
the telephone company engineers and he delivers the tapes each day to another 
courier, AVOIDANCE, } who takes them around to the transcribers who work 
either at home or in safe site offices. This courier also picks up the transcriptions 
and old tapes from the transcribers and passes them to Torres who sends them to 
the station each day with yet another courier who works for the Intelligence 
Department of the police. The police department thus arranges for connections 
and operates the LP. 

The courier AVOIDANCE is a station agent known only to Torres among the 
police department personnel involved. Each of the transcribers is unknown to the 
police department but copies of all the transcriptions, except in special cases, are 
provided by the station to the police intelligence department. Each operations 
officer in the station who receives telephone coverage of targets of interest to him 
is responsible for handling the transcribers of his lines: thus the Soviet operations 
officer, Russell Phipps, } is in charge of the two elderly Russian emigres who 
transcribe (in English) the Soviet lines; the CP officer, Paul Burns, J is in charge 
of the transcriber of the PCU line; and the Cuban operations officer is in charge 



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of the transcribers of the Cuban lines. Most of the transcribers are kept apart from 
one another as well as from the police department. 

The station, which provides technical equipment and financing for the 
operation, deals directly with the Chief of the Guardia Metropolitana, who is the 
police department official in overall charge of the telephone-tapping operation. 
He is usually an Army colonel or lieutenant-colonel detailed to run the Guardia 
Metropolitana, the paramilitary shock force of the police. Currently he is Colonel 
Roberto Ramirez. J Usually he assigns lines to be tapped as part of his operations 
against contraband operations which also provides cover for the station lines 
which are political in nature. Torres and de Anda work under the supervision of 
the Chief of the Guardia Metropolitana although approval in principle for the 
operation comes from the Minister of the Interior (internal security) and the Chief 
of the Montevideo Police Department. The station encourages the use of 
telephone tapping against contraband activities not only because it's good cover 
but also because police contraband operations are lucrative to them and such 
operations tend to offset fears of political scandal depending upon who happens 
to be Minister of the Interior at any particular time. 

Only seven lines are being monitored right now. They include three lines on 
Soviet targets (one on the Embassy, one on the Consulate and another that 
alternates between a second Embassy telephone and the Soviet Commercial 
Office), two on Cuban targets (one on the Embassy and one on the Commercial 
Office), one on a revolutionary Argentine with close associations with the 
Cubans, and one line assigned to the headquarters of the Communist Party of 
Uruguay. 

Security is a serious problem with the AVENGEFUL operation because so 
many people know of it: former ministers and their subordinates, former police 
chiefs and their subordinates, current officers in the Guardia Metropolitana and 
the Criminal Investigations and Intelligence Departments. Copies of the 
transcriptions prepared for the police intelligence department are considered very 
insecure because of the poor physical security of the department despite 
continuous station efforts to encourage tightening. Regular denunciations of 
telephone tapping by the police appear in the PCU newspaper, El Popular, but 
without the detail that might require shutting down the operation. 

Telephone tapping in Montevideo, then, is very shaky with many possibilities 
for serious scandal. 



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AVBARON. The station's only agent penetration of the Cuban mission is a 
local employee who began working for the station as a low-level penetration of 
the PCU. He is Warner, { the Cuban Embassy chauffeur, whose mother works at 
the Embassy as a cook. About two months ago the Cubans fired their chauffeur 
and the station instructed this agent to try, through his mother, to get hired by the 
Cubans as their new chauffeur. Paul Burns, the station officer in charge, arranged 
for a crash course in driving lessons and suddenly this agent became a very 
important addition to the operational programme against the Cubans. Through his 
mother's pleading he was hired, and in spite of an accident the first day he was 
out with the Embassy car, he has gained steadily in their confidence. Although he 
does not have access to documents or sensitive information on Cuban support to 
revolutionaries, he is reporting valuable personality data on Cuban officials as 
well as intelligence on security and other procedures designed to protect the 
Embassy and the Commercial Department. Meetings are held directly between 
the station officer and the agent, usually in a safe apartment site or an 
automobile. 

ECFLUTE. The only potential double-agent case against the Cuban 
intelligence service here is Medardo Toro, J the Ecuadorean sent to Buenos Aires 
by the Quito station to report on exiled former President Velasco. Although Toro 
claims to have established a channel from Velasco to the Cuban government 
through Ricardo Gutierrez Torrens, a Cuban diplomat believed to be their chief of 
intelligence in Montevideo, and the Quito station and headquarters as well are 
extremely interested in monitoring the channel for signs of possible Cuban 
support to Velasco, Ned Holman, the Montevideo Chief of Station, continues to 
avoid handling the case in Montevideo. His reasoning is that we already have 
more than enough work to do and he is afraid to open the door to still more 
coverage of exiles. For the time being Toro's meetings with Gutierrez will be 
monitored through reports sent by pouch from Buenos Aires. 

AVBUSY/ZRKNICK. The most important counter-intelligence case against 
the Cubans in Montevideo consists of the monitoring of the mail of a known 
Cuban intelligence support agent. The case started in 1962 when encoded radio 
messages began from Havana to a Cuban agent believed to be located either in 
Lima or La Paz. The National Security Agency is able to decrypt the messages 
which contain interesting information but fail to reveal the identity of the agent 



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who receives them. In one of the messages Havana control gave the name and 
address of an accommodation address in Montevideo to which the agent should 
write if necessary, including a special signal on the envelope to indicate 
operational correspondence. The addressee in Montevideo is Jorge Castillo, a 
bank employee active in the FIDEL political front, and the signal is the 
underlining of Edificio Panamerica no where Castillo lives. Operational 
correspondence is expected to be written in secret writing. 

In order to monitor this communications channel, should it be activated, the 
station has recruited the letter carrier who serves Castillo. Because the letter 
carrier, AVBUSY-1, J cannot be told of the special signal on the envelope (since 
it came from a sensitive decrypting process) the station officer has to review all 
the mail sent to Castillo — a very time-consuming process. So far no operational 
correspondence has been intercepted, but headquarters correspondence indicates 
that successful identification has been made of Cuban agents in similar 
ZRKNICK cases. (ZKRNICK is the cryptonym used for the entire 
communications monitoring operation against Cuban agents in Latin America.) 

AVBLIMP. The Soviet Embassy here is a large mansion surrounded by a 
garden and high walls. In order to monitor the comings and goings of Soviet 
personnel, especially the intelligence officers, the station operates an observation 
post in a high-rise apartment building about a block away and in front of the 
Embassy. The OP operators are a married couple who live in the o P as their 
apartment and divide the work: keeping a log of entries and exits of Soviet 
personnel, photographing visitors and the Soviets themselves from time to time, 
photographing the licence plates of cars used by visitors, signalling the 
AVBANDY surveillance team by radio in the same manner as the OP signals the 
AVENIN team at the Cuban Embassy. The AVBLIMP op also serves for special 
observation of the superior-inferior relationships among Soviet personnel, which 
requires long training sessions with the Soviet operations officer. Such 
relationships are vital for identifying the hierarchy within the KGB and GRU 
offices. The apartment is owned by a station support agent who ostensibly rents it 
to the OP couple as their living-quarters. 

AVBANDY. The new (1963) surveillance team formed to operate against the 
Soviets and Soviet-related targets consists of a team chief who is an Army major 
and five other agents. The team has two sedans and communications equipment 



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similar to that used by the AVENIN team, with coordination when appropriate 
with the AVBLIMP observation post. The team chief, AVBANDY-1, originally 
came to the attention of the station through the liaison operations with the 
Uruguayan military intelligence service, and after a period of development he 
was recruited to lead the new team without the knowledge of his Army chiefs. 
The team is currently undergoing intensive training by Eziquiel Ramirez, J a 
training officer from headquarters who specializes in training surveillance teams. 
His period with the AVBANDY team will total about eight weeks by the time he 
is finished next month. 

AVERT. For some years the station has owned, through AVERT- 1 , a support 
agent, the house that is joined by a common wall to the Soviet Consulate. The 
Consulate and the AVERT house are the opposite sides of the same three-storey 
building that is divided down the middle. The building is situated next to the 
Soviet Embassy property and backs up to the Embassy backyard garden. In the 
Consulate, in addition to offices, two Soviet families are housed, including the 
Consul who is a known KGB officer. The AVERT house has been vacant for 
several years and has been used operationally only for occasional visits by 
technicians with their sophisticated equipment for capturing radiations from 
Soviet communications equipment in the Embassy. When successful such 
electronic operations can enable encoded communications to be read but we 
haven't been successful so far in Montevideo. 

Recently there has been considerable indecision about what to do with the 
AVERT property: whether to use it as an additional OP, since it allows for 
observation of the garden where Soviet officers are known to have discussions; 
whether to use it to bug the Consulate offices and living- quarters; whether to sell 
it; or whether to retain it for some unknown future use. For the time being it is 
being retained for possible future use although the station strongly suspects that 
the Soviets are aware that it is under our control. They have, in fact, probably 
bugged our side as a routine matter of protection. 

SOVIET ACCESS AGENTS 

The weakest aspect of Soviet operations in Montevideo is the access agent 
programme — Uruguayans or others who can develop personal relationships with 
Soviet officials in order to report personality information, and, if appropriate, to 



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recruit or induce defection. Although three or four station agents are in contact 
with Soviet officers their relationships are weak and their reporting scanty. 

AVDANDY. Part of the station programme against the Cubans, Soviets and 
other communist diplomatic missions in Montevideo is keeping up-to-date 
photographs and biographical data on all their personnel. Although the 
observation posts against the 

Cubans and Soviets provide good photographs, their use is limited because of 
the necessity to protect the OP's. The Uruguayan Foreign Ministry, on the other 
hand, obtains identification photographs on all foreign personnel assigned to 
diplomatic missions in order to issue the identity card that each is supposed to 
carry. AVDANDY- 1, { is a medium-level official of the Foreign Ministry who 
gives copies of all these photographs to the Chief of Station as well as tidbits of 
information. Although efforts have been made to obtain passports of communist 
diplomatic personnel for a period long enough to photograph them, this agent has 
been reluctant to take the added risk of lending the passports when they are sent 
with the application. Nevertheless his willingness to turn over the Foreign 
Ministry Protocol Office files for copying in the station is a valuable, if routine, 
support function. 

ZRBEACH. One of the activities of the CIA in support of the National 
Security Agency's code-cracking task is to maintain teams of radio monitors in 
certain US embassies. Often but not only where Soviet diplomatic missions exist, 
CIA stations include a contingent of monitors who scan frequencies with 
sophisticated equipment and record radio communications which are passed to 
NSA for processing. The programme is called ZRBEACH. Such a team has been 
operating for some years in the Montevideo station. The monitors also place 
mobile stations as close as possible to target-encrypting machines for capturing 
radiations - as in the use of the AVERT house next to the Soviet Embassy here. 
ZRBEACH teams work under the direction of Division D of the DDP although 
locally they are supervised by the Chief of Station. 

When Ned Holman arrived in Montevideo he recommended that the 
ZRBEACH team be withdrawn for lack of production. Gradually their activities 
were curtailed and in recent weeks they have been packing equipment. Several 
have already departed for other stations and soon Fred Morehouse, | the 
ZRBEACH team chief, will leave for his new assignment in Caracas. 



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AVBALSA. Liaison with the Uruguayan military intelligence service is in 
charge of Gerry O'Grady, the Deputy Chief of Station, who meets regularly with 
Lieutenant-Colonel Zipitria, J the deputy chief of the service. Holman also 
occasionally meets Zipitria and when necessary Colonel Carvajal, | the military 
intelligence service chief. For some years the Montevideo station has tried to 
build up the capabilities of his liaison service through training, equipment 
donation and funding but with very little success. Even now, their main collection 
activity is clipping from the local leftist press. The main problem with this 
service is the Uruguayan military tradition of keeping aloof from politics, as is 
shown by Carvajal's reluctance to engage the service in operations against the 
PCU and other extreme-left political groups. On the other hand the Deputy Chief, 
Zipitria, is a rabid anti-communist whose ideas border on fascist-style repression 
and who is constantly held in check by Carvajal. For the time being the station is 
using the Deputy Chief as a source of intelligence on government policy towards 
the extreme left and on rumblings within the military against the civilian 
government. Hopefully Zipitria will some day be chief of the service. 

AVALANCHE. The main public security force in Uruguay is the 
Montevideo Police Department - cryptonym AVALANCHE — with which liaison 
relations date to just before World War II when the FBI was monitoring the 
considerable pro-Nazi tendencies in Uruguay and Argentina. In the late 1 940s, 
when the CIA station was opened, a number of joint operations were taken over 
from the FBI including the telephone-tapping project. Although police 
departments exist in the interior departments of Uruguay, the technical 
superiority and other capabilities of the Montevideo police almost always 
produce decisions by Ministers of the Interior that important cases be handled by 
AVALANCHE even when outside Montevideo. 

As in Ecuador, the Minister of the Interior is in charge of the police, and 
station liaison with civilian security forces begins with the Minister, currently a 
Blanco politician named Felipe Gil J whom Holman meets regularly. Holman 
also meets regularly, or whenever necessary, Colonel Ventura Rodriguez, J Chief 
of the Montevideo Police; Carlos Martin, J Deputy Chief; Inspector Guillermo 
Copello, } Chief of Investigations; Inspector Juan Jose Braga, J Deputy Chief of 
Investigations; Commissioner Alejandro Otero, J Chief of the Intelligence and 
Liaison Department; Colonel Roberto Ramirez, J Chief of the Guardia 



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Metropolitana (the anti-riot shock force); Lieutenant-Colonel Mario Barbe, J 
Chief of the Guardia Republicana (the paramilitary police cavalry); and others. 
Of these the most important are the Minister, Chief of Police, Chief of 
Intelligence and Liaison and Chief of the Guardia Metropolitana, who supervises 
the telephone-tapping operation. 

As in Argentina, the political sensitivity of an AID Public Safety Mission for 
improving police capabilities has precluded such a Mission in Uruguay and 
restricted police assistance to what overall demands on station manpower allow. 
But whereas in Argentina a non-official cover operations, officer has for some 
years been ostensibly contracted by the Argentine Federal Police } to run 
telephone-tapping and other joint operations, in Uruguay these tasks have been 
handled by station officers under official cover in the Embassy. Until January all 
the tasks relating to AVALANCHE were handled by the Deputy Chief of Station, 
but Holman took over these duties when Wiley Gilstrap, { the Deputy, was 
transferred to become Chief of Station in San Salvador and replaced by O'Grady, 
whose Spanish is very limited. The station long-range plans continue to be the 
establishment of an AID Public Safety Mission that would include a CIA officer 
in order to release station officers in the Embassy for other tasks. However, such 
a development will have to wait until a strong Minister of the Interior who will 
fight for the Public Safety Mission appears on the scene. On the other hand 
Uruguayan police officers are being sent by the station for training at the Police 
Academy, which has changed its name to the International Police Academy and 
is moving from Panama to Washington. 

Of the activities undertaken by the police on behalf of the station, the most 
important is the AVENGEFUL telephone-tapping operation. Other activities are 
designed to supplement the station unilateral collection programme and to keep 
the police from discovering these operations. Apart from telephone tapping these 
other activities are effected through the Department of Intelligence and Liaison. 

Travel Control. Each day the station receives from the police the passenger 
lists of all arrivals and departures at the Montevideo airport and the port where 
nightly passenger boats shuttle to Buenos Aires. These are accompanied by a 
special daily list of important people compiled by I & E personnel, including 
those travelling on diplomatic passports, important political figures, communists 
and leftists and leaders of the Peronist movement. On request we can also obtain 
the lists of travellers who enter or leave at Colonia, another important transit 



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point between Montevideo and Buenos Aires. Daily guest lists from the hotels 
and lodgings in Montevideo are also available. The main weakness in travel 
control is at the Carrasco airport, which is the main airport for Montevideo but is 
in the Department of Canelones just outside the Department of Montevideo, and 
there is considerable rivalry between the Montevideo and the Canelones police. 
More important, however, is the lucrative contraband movement at the airport 
which jealous customs officials protect by hampering any improvement of police 
control. Thus station efforts to set up a watch list and a document photography 
operation at the airport have been unsuccessful. 

Name Checks. As a service to the Embassy visa office, information is 
requested constantly from the police department, usually on Uruguayans who 
apply for US visas. Data from the intelligence and criminal investigations files is 
then passed by the station to the visa office for use in determining whether visas 
should be granted or denied. 

Biographical Data and Photographs. Uruguay has a national voter 
registration that is effectively an identification card system. From the 
AVALANCHE service we obtain full name, date and place of birth, parents' 
names, address, place of work, etc., and identification photos of practically any 
Uruguayan or permanent resident alien. This material is valuable for surveillance 
operations of the AVENIN and AVBANDY teams, for the Subversive Control 
Watch List and for a variety of other purposes. 

Licence Plate Data. A further help to station analysis of visitors to the Soviet 
and Cuban embassies are the names and addresses of owners of cars whose 
licence plate numbers are photographed or copied at the observation posts. The 
police make this information available without knowing the real reason. The 
same data is also used to supplement reporting by the two surveillance teams. 

Reporting. The Intelligence and Liaison Department of the Montevideo 
Police Department is the government's (and the station's) principal source of 
information on strikes and street demonstrations. This type of information has 
been increasing in importance during the past few years as the PCU-dominated 
labour unions have stepped up their campaigns of strikes and demonstrations in 
protest against government economic policies. When strikes and demonstrations 



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occur, information is telephoned to the station from I & E as the events progress. 
It includes numbers of people involved, degree of violence, locations, 
government orders for repression, and estimates of effectiveness, all of which is 
processed for inclusion in station reporting to headquarters, the Southern and 
Atlantic military commands, etc. At the end of each month I & E also prepares a 
round-up report on strikes and civil disturbances of which the station receives a 
copy. 

While contact between the various officers in the police department and the 
station is no secret to the Chief of Police — they are described as 'official' liaison 
— the station also maintains a discreet contact with a former I & E chief who was 
promoted out of the job and now is the fourth- or fifth-ranking officer in 
Investigations. This officer, Inspector Antonio Piriz Castagnet, J is paid a salary 
as the station penetration of the police department, and he is highly cooperative 
in performing tasks unknown to his superiors. The station thus calls on this agent 
for more sensitive tasks where station interest is not to be known by the police 
chief or others. Piriz also provides valuable information on government plans 
with respect to strikes and civil disorder, personnel movements within the police 
and possible shifts in policy. 

The overall cost of the AVALANCHE project, apart from AVENGEFUL 
telephone tapping, is about 25,000 dollars per year. 

SMOTH. The British Intelligence Service (MI-6), known in the CIA by the 
cryptonym SMOTH, has long been active in the River Plate area in keeping with 
British economic and political interests here. The station receives regularly 
copies of SMOTH reports via headquarters but they are of very marginal quality. 
Because of budget cutbacks the British are soon closing their one-man office in 
Montevideo but before returning to England the SMOTH officer will introduce 
Holman to the Buenos Aires Station Commander who will be in charge of MI-6 
interests in Montevideo. Basically a courtesy arrangement between colleagues of 
like mind, the SMOTH liaison is of little importance to the Montevideo 
operational programme. 

ODENVY. The FBI (cryptonym ODENVY) has an office in the Embassy in 
Rio de Janeiro (Legal Attache cover) whose chief is in charge of looking after 
FBI interests in Uruguay and Argentina. Occasionally the FBI chief comes to 
Montevideo for visits to the police department and he usually makes a courtesy 



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call on the Montevideo Chief of Station. Soon, however, the FBI will be opening 
an office in the Embassy in Buenos Aires which will take over FBI interests in 
Uruguay. 

Covert Action (CA) Operations 

AVCHIP. Apart from Ralph Harry the other non-official cover contract 
officer is a young ex-Marine who is ostensibly the Montevideo representative for 
several US export firms. The cover of this officer, Brooks Read, % has held up 
well during the three or four years that he has been in Montevideo, mainly 
because he has socialized mostly with the British crowd he met as a leader of the 
English-speaking theatre group in Montevideo. Although he originally worked in 
the station FI programme, during the past year he was transferred to the CA side 
as cutout and intermediate case officer for media and student operations. 
Although time-consuming, handling Read's affairs inside the station is a joy for 
O'Grady, the inside officer in charge, by comparison with the plethora of 
problems constantly caused by Harry. 

AVBUZZ. Because of the large number of morning and afternoon 
newspapers in Montevideo, press media operations are centralized in 
AVBUZZ- 1, % who is responsible for placing propaganda in various dailies. As 
each newspaper of the non-communist press is either owned by or responds to 
one of the main political factions of the principal political parties, articles can be 
placed more easily in some newspapers than in others depending upon content 
and slant. AVBUZZ- 1 has access to all the liberal press but he uses most 
frequently the two dailies of the Union Blanca Democratica faction of the Blanco 
Party {El Pais and El Plata), the morning newspaper of the Colorado Party List 
14 {El Did), and the morning newspaper of the Union Colorada y Batllista {La 
Manana) to a lesser extent. AVBUZZ- 1 pays editors on newspapers on a space- 
used basis and the articles are usually published as unsigned editorials of the 
newspapers themselves. O'Grady is in charge of this operation which he works 
through Brooks Read who deals directly with AVBUZZ- 1 . All told the station can 
count on two or three articles per day. Clips are mailed to headquarters and to 
other stations for replay. 

AVBUZZ- 1 also writes occasional fly-sheets at station direction, usually, on 
anti-communist themes, and he operates a small distribution team to get them on 



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the streets after they are secretly printed in a friendly print shop. Television and 
radio are also used by AVBUZZ- 1 , although much less than newspapers because 
they carry less political comment. 

AVBLOOM. Student operations have had very limited success in recent 
years in spite of generous promotion of non-communist leaders for FEUU 
offices. Recently the station recommended, and headquarters agreed, that student 
operations be refocused to concentrate on the secondary level rather than at the 
University — on the theory that anti-communist indoctrination at a lower level 
may bring better results later when the students go on to the University. Brooks 
Read works with several teams of anti-communist student leaders whom he 
finances for work in organization and propaganda. O'Grady is also the station 
officer in charge of student operations. 

AVCHARM. Labour operations for some years have been designed to 
strengthen the Uruguayan Labor Confederation J (CSU), which is affiliated with 
the ORIT-ICFTU J structure, but we have been unsuccessful in reversing its 
decline in recent years. A crucial decision on whether to continue support to the 
CSU must soon be made. If the CSU is to be salvaged the station will have to 
replace the present ineffectual leaders, not a pleasant prospect because of their 
predictable resistance, and begin again practically from the beginning. The fact is 
that the CSU is largely discredited, and organized labour is overwhelmingly 
aligned either inside, or in cooperation with, the CTU and the extreme left. Apart 
from the CSU, station labour operations are targeted at selected unions that can 
be assisted and influenced, perhaps eventually controlled, through the 
International Trade Secretariats that operate in Latin America, such as the 
International Transport Workers Federation. J 

The most important new activity in labour operations is the establishment last 
November of the Montevideo office of the American Institute for Free Labor 
Development. J This office is called the Uruguayan Institute of Trade Union 
Education J and its director, Jack Goodwyn, J is a US citizen contract agent and 
the Montevideo AIFLD representative. Alexander Zeffer, } the station officer in 
charge of labour operations, meets Goodwyn under discreet conditions for 
planning, reporting and other matters. In addition to training locally at the AIFLD 
institute, Uruguayans are also sent to the ORIT school in Mexico and to the 
AIFLD school in Washington. 



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AVALON. This agent, A. Fernandez Chavez, J has for many years been used 
for placing propaganda material and as a source of intelligence on political 
matters. At times when AVBUZZ-1 cannot place things the station wants in the 
papers, Fernandez may be successful because of his very wide range of friends in 
political and press circles. He is the Montevideo correspondent of ANSA, the 
Italian wire service, and of the Santiago station-controlled feature news service 
Agenda Orbe Latinoamericano. % Although he occasionally meets Holman, his 
usual station contact is Paul Burns, the CP officer. 

AVID. Although the political-action operations formerly effected through 
Benito Nardone have largely ended, Holman continues to see Nardone, Nardone's 
wife Olga Clerici de Nardone, % who is very active in the Ruralist movement, and 
Juan Jose Gari, % Nardone's chief political lieutenant. Gari has the major political 
plum assigned to the Ruralists in the current Blanco government — he's President 
of the State Mortage Bank. Should a policy change occur and the station return to 
political and militant action, one place we would start is with Mrs Nardone and 
Gari — even if Nardone himself fails to survive his struggle with cancer. 

AVIATOR. Holman recently turned over to O'Grady the responsibility for 
keeping up the developmental contact with Juan Carlos Quagliotti, % a very 
wealthy right-wing lawyer and rancher. This man is the leader of a group of 
similarly well-to- do Uruguayans concerned with the decline in governmental 
effectiveness and in the gains made by the extreme left in recent years. He is 
active in trying to persuade military leaders to intervene in political affairs, and 
would clearly favour a strong military government, or military-dominated 
government, over the current weak and divided executive. Although the station 
does not finance or encourage him, an attempt .is made to monitor his activities 
for collecting intelligence on tendencies in military circles to seek 
unconventional solutions to Uruguayan difficulties. Should the need arise for 
station operations designed to promote military intervention, Quagliotti would be 
an obvious person through whom to operate. 



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SUPPORT AGENTS 

As in other stations we have a fairly large number of support agents who own 
and rent vehicles or property for use in station operations. These agents, mainly 
social acquaintances of station officers, are usually given whisky or other 
expensive and hard-to-get items that can be brought in with diplomatic free-entry, 
rather than salaries. Tito Banks, J a wool dealer of British extraction, is one of 
the more effective of these agents. 

As in Ecuador, the station in Montevideo is getting no small mileage from a 
relatively small number of officers. The station budget is a little over one million 
dollars per year. Major improvement is needed in the access agent programme 
against the Soviets, direct recruitment against the Cubans, higher-level 
penetrations of the PCU, improvement in the capabilities of police intelligence, 
and greater effectiveness in labour and student operations. 

Next week I begin to take over all the operations targeted against the Cubans, 
not all of which are being handled at present by the officer I am replacing, 
Michael Berger. This officer has had difficulty in learning Spanish and on the 
whole has been able to work only with English-speaking agents. He's being 
married to an Uruguayan girl next week-end and afterwards will depart for a 
honeymoon, home leave and reassignment to the Dominican Republic. 

The operations I'm taking over are the following: the AVCASK operations 
against the Paraguayans; the AVIDITY letter intercept; Ralph Hatry and his 
problems (unfortunately); the telephone-tap transcriber AVENGEFUL-9; 
AVANDANA; the chauffeur at the Cuban Embassy; the observation post at the 
Cuban Embassy; the AVENIN surveillance team; the AVBASK penetration of the 
MRO; the Foreign Ministry protocol official who provides photographs and other 
data on communist diplomats; and the postman who delivers letters to the 
ZRKNICK Cuban intelligence support agent. I'm also temporarily (I hope) taking 
over Holman's contacts with Inspector Antonio Piriz, J our main penetration of 
the Montevideo Police Department, and with Commissioner Alejandro Otero, J 
the Chief of the Intelligence and Liaison Department. 



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Montevideo 26 March 1964 

The ruling Blanco Party is in a deepening crisis right now that illustrates both 
the complexity and the fragmentation of Uruguayan politics — and the effect these 
conditions have on our operations. 

In January the Chief of Police of Canelones, the interior department that 
borders on Montevideo, was involved in a bizarre bank robbery in which the two 
robbers were gunned down by police just as they were leaving the bank. Press 
reporting revealed that there was a third member of the gang who had been 
working for the Canelones Police Chief and had previously advised which bank 
was to be robbed, the day and time of the robbery and the hideouts to be used by 
the robbers afterwards. The Police Chief provided weapons for the robbers that 
had been altered so that they would not fire. In the fusillade of bullets fired by the 
police ambush, a policeman and a passer-by were wounded, but the Police Chief 
defended such exaggerated firepower, on the grounds that the robbers had first 
fired several shots at the police. The most ironic note for the murdered robbers 
was that the Montevideo press had carried several articles during the week before 
the robbery that unusual police movements in Canelones at that time were due to 
a tip-off on a probable robbery. Had the robbers read the newspapers they would 
have known they were betrayed. 

An uproar followed this irregular police procedure, producing an 
investigation in the Ministry of the Interior and a movement to fire the Police 
Chief and prosecute him for not having prevented the robbery. Lines are now 
drawn in the Blanco Party between those supporting the Police Chief, who comes 
from one Blanco faction, and those supporting Felipe Gil, } the Minister of the 
Interior, who comes from another Blanco faction and who is leading the 
movement against the Police Chief. Supporters of the Chief, in fact, are charging 
that the Chief had kept the Minister fully informed on the case and that the 
Minister is to blame for any unethical procedures. 

Benito Nardone } died yesterday but almost until the end he was making 
radio broadcasts in support of the Canelones Police Chief. According to reports 
from Juan Jose Gari J there is no quick solution in sight, and so the Blancos 
continue to weaken — a process that reaches right up to the Blanco NCG majority. 
The Colorados aren't sitting idly by. The day after I arrived they got a Colorado 
elected President of the Chamber of Deputies by taking advantage of Blanco 
splits. Meanwhile Holman's chief project with the Minister, establishment of an 



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AID Public Safety Mission in the police, continues in abeyance pending a 
decision by Gil. 

Montevideo 1 April 1964 

It's all over for Goulart in Brazil much faster and easier than most expected. 
He gave the military and the opposition political leaders the final pretext they 
needed: a speech to the Army Sergeants' Association implying that he backed the 
non-commissioned officers against the officer corps. Coming right after acts of 
insubordination by low-ranking sailors and marines, the speech couldn't have 
been better timed for our purposes. The Rio station advised that Goulart is 
probably coming to Uruguay which means Holman's fears about new exile 
problems were real. US recognition of the new military government is practically 
immediate, not very discreet but indicative, I suppose, of the euphoria in 
Washington now that two and a half years of operations to prevent Brazil's slide 
to the left under Goulart have suddenly bloomed. 

Our campaign against him took much the same line as the ones against 
communist infiltration in the Velasco and Arosemena governments two and three 
years ago in Ecuador. According to Holman the Rio station and its larger bases 
were financing the mass urban demonstrations against the Goulart government, 
proving the old themes of God, country, family and liberty to be effective as ever. 
Goulart's fall is without doubt largely due to the careful planning and consistent 
propaganda campaigns dating at least back to the 1962 election operation. 
Holman's worry is a new flood of exiles to add to the Paraguayans and 
Argentines we already have to cover. 

Montevideo 3 April 1964 

My first Cuban recruitment looks successful. A trade mission arrived from 
Brazil and will be here until sometime next week. An agent of the Rio station had 
reported that Raul Alonzo Olive, a member of the mission and perhaps the most 
important because he's a high-level official in the sugar industry, seemed to be 
disaffected with the revolution. In order to protect the Rio agent against 
provocation and because of the confusion in Brazil this past week, the Rio station 
suggested that a recruitment approach be made here or in Madrid which is their 
last stop before return to Havana. 



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The AVENIN surveillance team followed him after arrival and at the first 
chance when he was alone they delivered a note from me asking for a meeting. 
The note was worded so that he would know it came from the CIA. After reading 
it he followed the instructions to walk along a certain street where I picked him 
up and took him to a safe place to talk. Headquarters had sent a list of questions 
for him, mostly dealing with this year's sugar harvest, efforts to mechanize cane 
cutting, and anyone else he might know was dissatisfied. We spoke for about two 
hours because he had to rejoin his delegation, but we'll meet again several times 
before he leaves for Madrid. Contact instructions just arrived from the Madrid 
station. 

He said sugar production from this year's harvest should be about five 
million tons and he rambled on at length about the problems with the cane- 
cutting machines, mostly caused when used on sloping or inclined surfaces. What 
was surprising was that he knows so many government leaders well even though 
he wasn't particularly active in the struggle against Batista. 

I recorded the meeting, which he didn't particularly like, and reported by 
cable the essentials of what he said. He thinks he will be in Madrid for most of 
next week, or perhaps longer, so communications training can be done there. 
Strange he agreed so readily to return to Cuba and for his salary to be kept safe 
for him by the CIA, but he seemed honest enough. In Madrid he'll get the 
polygraph, which should help to resolve his bona fides. 

Montevideo 5 April 1964 

Goulart arrived here yesterday and was greeted with a surprising amount of 
enthusiasm. The military takeover, in fact, has been rather badly received here in 
Uruguay because Goulart was popularly elected and a strong Brazilian military 
government may mean difficulties for Uruguay over exiles. Already officials of 
Goulart's government are beginning to arrive, and the Rio station is sending one 
cable after another asking that we speed up reporting arrivals. Our only source 
for this information is Commissioner Otero, % whose Intelligence and Liaison 
Department is in charge of processing the exiles. It's clear that the Rio station is 
going an out to support the military government, and the key to snuffing out any 
counter-coup or insurgency is in either capturing or forcing into exile Leonel 
Brizola, Goulart's far-left brother-in-law who is the Federal Deputy for 
Guanabara (Rio de Janeiro) and is now in hiding. 



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Headquarters has begun to generate hemisphere-wide propaganda in support 
of the new Brazilian government and to discredit Goulart. For example, Arturo 
Jauregui, J Secretary-General of ORIT, has sent a telegram pledging ORIT J 
support for the new Brazilian government. This may provoke a negative reaction 
in places like Venezuela because the CIA's policy before was to have ORIT 
oppose military takeovers of freely elected governments — not very realistic in 
view of the way events are moving. 

Through AVBUZZ we're currently promoting opinion favourable to the 
Venezuelan case against Cuba in the OAS based on the arms cache discovered 
last year. One of our placements was a half-page paid advertisement in the 
Colorado daily La Manana that came out yesterday. It was ostensibly written and 
signed by Hada Rosete, } the representative here of the Cuban Revolutionary 
Council } and one of the propaganda agents of the AVBUZZ project. In fact it 
was written by O'Grady and Brooks Read and based on information from 
headquarters and from station files. The statement relates the arms cache to 
overall Soviet and Cuban penetration of the hemisphere, including allegations 
attributed to Rolando Santana, } last year's Cuban defector here. Current 
insurgent movements in Venezuela, Honduras, Peru, Colombia, Argentina, 
Panama and Bolivia are described as being directed from Soviet and Cuban 
embassies in Mexico City, Buenos Aires and Montevideo, not to exclude the 
Chinese communists who were also mentioned. 

Montevideo 18 April 1964 

Holman returned from a Chiefs of Station conference with the grudging 
acknowledgement that we'll have to devote more attention to the Brazilian exiles. 
The decision was made, apparently by President Johnson himself, that an all-out 
effort must be made not only to prevent a counter-coi/p and insurgency in the 
short run in Brazil, but also to build up their security forces as fast and as 
effectively as possible for the long run. Never again can Brazil be permitted to 
slide off to the left where the communists and others become a threat to take 
things over or at least become a strong influence on them. 

Here in Montevideo this policy means that we will have to assist the Rio 
station by increasing collection of information about the exiles. This will have to 
be through police intelligence for the time being and will be my responsibility 
since Holman, as I suspected, wants me to continue to work with Otero, Piriz, de 



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Anda, Torres and others while he maintains the high-level contacts with the 
Minister of the Interior, Felipe Gil, and the Chief of Police, Colonel Ventura 
Rodriguez. f As a start I have gotten Otero to place his officers at the residences 
of Goulart and three or four of the most important exiles, according to the Rio 
station's criteria, and these officers will keep logs of visitors while posing as 
personal security officers for the exiles. We'll forward highlights of the reports to 
Rio by cable along with information on new arrivals with full copies following 
by pouch. 

The political currents here are running against the new military government 
in Brazil and making favourable editorial comment very difficult to generate. The 
Brazilian government, nevertheless, has begun to pressure the Uruguayans in 
different ways so that Goulart and his supporters in exile here will be forbidden 
to engage in political activities. 

Promoting sentiment in favour of a break in relations with Cuba is almost as 
difficult here as promoting favourable comment towards Brazil. Not that 
Uruguayans are fond of communism or well-disposed towards the Cuban 
revolution. The corner stone of Uruguayan foreign policy is strict non- 
intervention because of the country's vulnerability to pressures from its two giant 
neighbours. Since sanctions or collective action against Cuba can easily be 
interpreted as intervention in Cuba's internal affairs, the station programme to 
promote a break in relations runs counter to Uruguayan traditional policies. 

Even so, we are keeping up media coverage of Cuban themes in the hope that 
Venezuelan attempts to convoke an OAS Foreign Ministers conference over the 
arms cache will result not only in the conference but in a resolution for all OAS 
countries to break with Cuba. A few days ago the former Venezuelan Foreign 
Minister under Betancourt, Marcos Falcon Briseno, was here trying to drum up 
support for the conference but he couldn't convince the Uruguayans to join 
actively in the campaign. 

Montevideo 24 April 1964 

We've just had a visit from the new WH Division Chief, Desmond 
FitzGerald, J who is making the rounds of field stations. Holman gave a buffet 
for all the station personnel and wives, and in the office each of us had a short 
session with FitzGerald to describe our operations. He was pleased with the 
Cuban recruitment but suspects he may have been a provocation because of his 



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high estimate of the sugar harvest. Instead of five million tons, according to 
FitzGerald, production this year will probably be less than four million. He also 
encouraged me to concentrate on making an acceptable recruitment approach to 
the Cuban code clerk here. When we told him that one of our station offices has a 
common wall with an uncontrolled apartment in the building next door, he 
ordered that a large sign be immediately placed on the wall reading: 'This Room 
is Bugged!' Rank has its privileges in the CIA too. 

FitzGerald was very insistent that the Montevideo station devote attention to 
supporting the new Brazilian military government through intelligence collection 
and propaganda operations. Holman has given O'Grady the overall responsibility 
for Brazilian problems, and the Rio station is going to help by sending down one 
of its liaison contacts as military attache in the Brazilian Embassy. He is Colonel 
Camara Sena, J and he is due to arrive any day. O'Grady will be meeting with 
him and will assist him in developing operations to penetrate the exile 
community. 

In spite of Goulart's popularity here, the NCG voted yesterday to recognize 
the Brazilian government which should serve to ease tensions. Also, Goulart has 
been declared a political asylee rather than a refugee which is a looser status that 
would have allowed him more freedom for political activities. 

Montevideo 2 May 1964 

Headquarters has approved my plan for recruitment of Roberto Hernandez, 
the Cuban code clerk, and we shall see if luck prevails. I'm using Ezequiel 
Ramirez, J the training officer from headquarters who's just finished training the 
AVBANDY surveillance team, to make the initial contact. He can pass for a 
Spaniard or Latin American and will be less dangerous for Hernandez (if he 
accepts) until we can establish a clandestine meeting arrangement. Today 
Ramirez begins working with the AVENIN surveillance team to follow 
Hernandez from the Embassy to wherever in town the first approach can be 
made. 

It's very hard to tell what the chances are, although reporting from Warner, 
{the Cuban Embassy chauffeur, has been excellent in providing insight into 
Hernandez's personality. He not only is having problems with his wife, who has 
just had a baby, but he seems to be more than casually involved with Mirta, his 
Uruguayan girlfriend. Because of Mirta I rejected the girl offered by the Miami 



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station and will concentrate on interesting Hernandez in eventual resettlement, 
possibly in Buenos Aires. In addition to his duties as code clerk he is the 
Embassy technical officer with proficiency in photography Perhaps resettlement 
could include setting him up with a commercial photography shop. For the 
moment, however, we will offer him, per headquarters instructions, thirty 
thousand dollars for a straight debriefing on what he knows of Cuban intelligence 
operations; fifty thousand dollars for the debriefing and provision and 
replacement of the code pads; and three thousand dollars for each month he will 
work for us while continuing to work in the Embassy. I have a safe apartment all 
ready to use if Hernandez agrees and will take over from Ramirez as quickly as 
possible. 

The other day I cornered Holman and proposed that I could do more with the 
police work and Cuban operations if I weren't bogged down with the 
Paraguayans, the letter intercept and Ralph Hatry. It was a dirty move because I 
suggested that Alex Zeffer, J the labour officer, could probably take over these 
operations. Holman agreed and then told Zeffer who hasn't spoken to me since. 
He knows all about Harry's problems and of the drudgery involved in the letter 
intercept. 

I'll continue to go occasionally at night to AVANDANA's J house in order to 
discuss problems of the Cuban Embassy observation post with his wife. I 
wouldn't want to miss that experience — the house is a low bungalow set far back 
off the street in a sparsely populated section on the edge of town and surrounded 
by thick woods, almost jungle. The house is protected by a high chain-link fence 
and perhaps a half-dozen fiercely barking dogs. Such isolation in this 
addamsesque setting is convenient in that AVANDANA is almost completely 
deaf and operational discussions are necessarily but insecurely loud when not 
screaming. Each time I have visited the home I have gone with Hatry, and the 
picture of these two ageing men yelling furtively over their spy work is an 
interesting study in contradiction. 

Another operation that I took over has resolved itself. Anibal Mercader, % the 
MRO penetration, decided to seek employment in the US. He was hired by a 
Miami bank and is leaving shortly — I arranged to keep his MRO membership off 
the station memorandum on his visa application. 

I don't envy Alex Zeffer for his labour operations. He is going to have to start 
again, practically from scratch, because the decision was finally made to 
withdraw support from the Uruguayan Labor Confederation % (CSU). Last month 



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the CSU held a congress and the leadership was unable to overcome the 
personality conflicts that have resulted in continuing withdrawals of member 
unions and refusals of others to pay dues. The real problem is leadership and 
when Andrew McClellan, J the AFL-CIO Inter-American Representative, and 
Bill Doherty, J the AIFLD social projects chief arrived last week they advised 
CSU leaders that subsidies channelled through the ICFTU, ORIT and the ITS are 
to be discontinued. 

The situation is rather awkward because the CSU has just formed a workers' 
housing cooperative and expected to receive AIFLD funds for construction. 
These funds will also be withheld from the Cs u and may be channelled through 
another noncommunist union organization. Next week Serafmo Romualdi, } 
AIFLD Executive Director, will be here for more conversations on how to 
promote the AIFLD programme while letting the CSU die. One thing is certain: it 
will take several years before a new crop of labour leaders can be trained through 
the AIFLD programme and, from them recruitments made of new agents who can 
set up another national confederation to affiliate with ORIT and the ICFTU. 

Montevideo 5 May 1964 

None of us can quite believe what is happening. Just as planned, Ramirez, 
and the surveillance team followed Hernandez downtown, and at the right 
moment he walked up to Hernandez in the street and told him the US government 
is interested in helping him. Hernandez agreed to talk but only had about fifteen 
minutes before he had to get back to the Embassy. He was a pale bundle of 
nerves but he agreed in principle to the debriefing and to providing the pads. 
Another meeting is set for tomorrow afternoon. 

I sent a cable advising headquarters of the meeting and suggesting that they 
send down the Division D technician right away so that he can work on the pads 
on a moment's notice. If this recruitment works, as it seems to be working, we'll 
have the first important penetration of Cuban operations in this region. 

More anti-Cuban propaganda. Representatives of the Revolutionary Student 
Directorate in Exile J (DRE), an organization financed and controlled by the 
Miami station, arrived today. They're on a tour of South America hammering 
away at the Cuban economic disaster. We don't have a permanent representative 
of the DRE in Montevideo so arrangements were made by Hada Rosete } and 
AVBUZZ- 1 . Also through AVBUZZ- 1 we're generating propaganda on the trial 



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in Cuba of Marcos Rodriguez, a leader of the Revolutionary Student Directorate 
in the struggle against Batista. Rodriguez is accused of having betrayed 26 of 
July members to the Batista police, and our false line is that he was really a 
communist and was instructed to betray to 26 of July people by the Cuban 
Communist Party. Purpose: exacerbate differences between the old-line 
communists and the 26 of July people. We're also playing up the Anibal 
Escalante purge. Both cases are causing serious divisions in Cuba where, 
according to AVBUZZ-1, 'the repression is comparable to that under Hitler, 
Mussolini and Stalin as the revolution devours its own'. 

The internal crisis in the Blanco Party over the Canelones police case 
continues to grow. What is at stake, besides the reputations of the principals, is 
the division of spoils among the Blanco factions — a very delicate balance 
negotiated with difficulty and easily upset by internal struggle. Rumours abound 
of an impending Cabinet crisis. 

Montevideo 10 May 1964 

All is not well on the Hernandez recruitment. He made the second meeting 
with Ramirez, but refused to talk about Cuban operations until he actually saw 
the money. He doesn't trust us an inch. Zeke set up a third meeting and I went 
with fifteen thousand dollars — practically all the cash we have right now in the 
station. Holman was nervous about me taking out all that money, but if we're 
going to get Hernandez to talk we have to at least show him the money and 
maybe even give him a little. O'Grady also came along for extra security, but 
Hernandez didn't show. 

My plan was to give Hernandez up to one thousand dollars if he would begin 
talking and then try to convince him to let me keep everything for him in an 
Agency account until we finally arrange for him to 'disappear'. Otherwise he 
might be discovered with large sums of money he can't explain. For four nights 
now I've been waiting for him and if he doesn't show up tonight I'll get Zeke back 
into action with the surveillance team. 

Yesterday the Division D technician arrived. He says he only needs the code 
pads for a few hours in order to open, photograph and reseal them. That's going 
to be a neat trick: the pads have adhesive sealers on all four edges so it's only 
possible to see the top page. But if we get them copied we'll be able to read all 
their traffic for as long as the pads last. 



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For me the most important thing is the debriefing on their intelligence 
operations. Hernandez told Zeke that he knows absolutely everything they're 
doing here and I believe him. Tonight he's got to show. 

Leonel Brizola, leader of the far-left in the Goulart government and Goulart's 
brother-in-law, arrived here in exile and the Brazilian government has asked that 
both he and Goulart be interned. If interned they will have to live in an interior 
city without freedom of movement around the country which would make control 
much easier. As the most dangerous political leader in the old government, 
Brizola's leaving Brazil is a favourable development. He had been in hiding since 
the fall of Goulart. The Rio station wants close coverage of him. 

Montevideo 15 May 1964 

Something is definitely going wrong on the Hernandez recruitment. From the 
observation post at the Cuban Embassy I know Hernandez practically hasn't left 
the Embassy since the second meeting with Zeke Ramirez. For four days the 
surveillance team and Zeke have been waiting for the signal from the OP in order 
to intercept Hernandez again for another try. According to the telephone tap on 
the Embassy Hernandez isn't taking many calls either, and the chauffeur reported 
today that Hernandez hasn't spoken to him lately. I can't give him special 
instructions because I don't want him to suspect we have a recruitment going on. 
Nothing to do but just be patient and keep on trying. 

Another nuisance assignment. The Santiago station has a really big operation 
going to keep Salvador Allende from being elected President. He was almost 
elected at the last elections in 1958, and this time nobody's taking any chances. 
The trouble is that the Office of Finance in headquarters couldn't get enough 
Chilean escudos from the New York banks so they had to set up regional 
purchasing offices in Lima and Rio. But even these offices can't satisfy the 
requirements so we have been asked to help. 

The purchasing agent for currency in this area is the First National City 
Bank, J but the Buenos Aires station usually handles currency matters because 
they have a 'Class A' finance office empowered to purchase currency. As a 'Class 
B' station we are restricted to emergencies for exchanging dollars for local 
currency. Nevertheless, headquarters sent down a cheque drawn on an account in 
the New York City Bank office which I took over to Jack Hennessy, J who is the 
senior US citizen officer at the Montevideo Citibank. He is cleared by 



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headquarters for currency purchases and had already been informed by Citibank 
in New York to expect the cheque. I gave him the cheque and he sent his buyers 
over to Santiago for discreet purchase. In a couple of days they were back — 
according to Hennessy they usually bring the money back in suitcases paying 
bribes to customs officials not to inspect — and Paul Burns and I went down to 
see Hennessy for the pick-up. When we got back to the station we had to spend 
the rest of the day counting it — over one hundred thousand dollars' worth. Now 
we'll send it to the Santiago station in the diplomatic pouch. They must be 
spending millions if they have to resort to this system and New York, Lima and 
Rio de Janeiro together can't meet the demand. 

Montevideo 20 May 1964 

The Hernandez recruitment has failed — for the time being anyway. Today he 
finally left the Embassy and with the surveillance team Zeke Ramirez caught him 
downtown. Hernandez refused to speak to Ramirez or even to acknowledge him. 
The key to the operation now is whether Hernandez told anyone in the Embassy 
of his first conversations with Ramirez and all the signs are negative. Today, in 
fact, Hernandez turned pale when Zeke approached him. If he had reported the 
recruitment he wouldn't be so panicky because his position in the Embassy would 
be firm. Undoubtedly his fright derives from failure to report the first 
conversations with Zeke — meaning that his initial acceptance was genuine. 
Ramirez will return to Washington tomorrow and we'll let Hernandez get back 
into his old habits before approaching him again. According to his first 
conversations with Ramirez, Hernandez's political and cultural orientation is 
towards Argentina or Brazil rather than the US. Perhaps we will enlist help from 
the Buenos Aires or Rio stations with a security service penetration agent who 
could make the next approach in the name of the Brazilian or Argentine 
government. 

Montevideo 23 May 1964 

Hernandez has panicked but we'll probably get him after all. This morning I 
had an emergency call from the Cuban Embassy chauffeur and when we met he 
reported that when he arrived this morning at the Embassy everything was in an 
uproar. Hernandez left the Embassy — he lives there with his family — sometime 



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during last night leaving behind his wedding-ring and a note for his wife. The 
Cubans believed he has defected and that he's with us, either in hiding here or on 
his way to the US. From the worry and gloom at the Embassy the chances are 
that he took the code pads with him. 

I told the chauffeur to stick around the Embassy all day, if possible — he 
doesn't usually work on Saturday afternoons — and to offer to work tomorrow. 
Then I got the Cuban Embassy observation post going — we usually close down 
on week-ends — and with Holman, O'Grady and Burns we tried to decide what to 
do. What we can't figure out is where Hernandez is and why he hasn't come to 
the Embassy. We arranged for the front door to be left open so that Hernandez 
can walk right in instead of waiting after ringing the bell, and tonight (in case he's 
waiting for darkness) we'll have a station officer sitting in the light just inside the 
front door. Somehow we have to give Hernandez the confidence to walk on in. 
Sooner or later he's got to appear. 

Montevideo 24 May 1964 

Hernandez is out of his mind. The chauffeur called for another emergency 
meeting and reported that Hernandez arrived back at the Embassy sometime after 
daybreak. He's being kept upstairs under custody. Several times yesterday and 
today the Charge went over to the Soviet Embassy, probably because the Soviets 
are having to handle the Cuban's encoded communications with Havana about 
Hernandez. What possibly could have possessed Hernandez to change his mind 
again? 

Montevideo 26 May 1964 

According to the chauffeur, Hernandez is going to be taken back to Cuba 
under special custody — Ricardo Gutierrez and Eduardo Hernandez, both 
intelligence officers, will be the escorts. They leave Friday on a Swissair flight to 
Geneva where they transfer to a flight to Prague. 

The chauffeur also learned from Hernandez that when he disappeared from 
the Embassy last Saturday he went to see his friend Ruben Pazos and they drove 
together to the Brazilian border. Hernandez had the code pads with him and 
planned to defect to the Brazilian Consul in Rivera, but the Consul was out of 
town for the week-end. After waiting a while Hernandez changed his mind again 



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and decided to take his chances with revolutionary justice — he told 
AVBARON-1, the chauffeur, that he'll probably have to do about five years on a 
correctional farm. I wonder. 

We've decided to make the case public for propaganda purposes and also to 
try to spring Hernandez loose on the trip home. The decision to publish came 
after the Minister of the Interior, Felipe Gil, refused to get the Foreign Ministry 
or the NCG involved — Holman told him that Hernandez had been caught trying 
to defect to us and asked for official efforts to save him. The most the Minister 
would agree to was a police interview at the airport, in which Hernandez will be 
separated, by force, if necessary, from his escorts. Through AVBUZZ-1, 
meanwhile, we'll expose the case as a sensational kidnapping within the Cuban 
Embassy of a defector trying to flee from communist tyranny. 

Montevideo 28 May 1964 

The story of Hernandez's kidnapping is splashed all over the newspapers and 
is provoking just the reaction we wanted. AVBUZZ-1 sent several reporters to the 
Embassy seeking an interview with Hernandez and they were turned away, 
adding to speculation that perhaps only Hernandez's corpse will eventually 
appear. 

I've alerted each of the stations where Hernandez's flight will stop on the way 
to Geneva. So far the stations in Rio de Janeiro, Madrid and Berne are going to 
take action. Rio and Madrid will arrange for police liaison services to speak with 
Hernandez and the Geneva base will arrange for uniformed Swiss police to be in 
evidence while Hernandez is in transit, although forcing an interview is too 
sensitive for the Swiss. 

We hope Hernandez won't get that far. Through the Chief of Police, Colonel 
Ventura Rodriguez, we have the interview arranged at the airport tomorrow 
before the flight leaves. Inspector Antonio Piriz J and Commissioner Alejandro 
Otero J will both be there, and Hernandez will be separated for a private 
interview in which our police agents will try to convince him to stay rather than 
face punishment on return. I'll also be at the airport to speak with him if he shows 
signs of agreeing to political asylum in Uruguay. 



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Montevideo 29 May 1964 

More propaganda but Hernandez couldn't be convinced. At the airport, 
Gutierrez, one of the escorts, tried to resist having Hernandez separated for the 
police interview. During the scuffle he pulled out a pistol and was forcibly 
disarmed. Hernandez, however, insisted that he was returning of his own will and 
eventually he and his wife and child boarded the flight with the two escorts. So 
far no news from stations along the way. 

This morning before his departure the Cubans recovered somewhat from the 
adverse propaganda by inviting the press to the Embassy for an interview with 
Hernandez. Hernandez said he was returning to Cuba because he feared reprisals 
against his wife and son from certain persons (unidentified) who were trying to 
get him to betray his country. For the past twenty days, he admitted, certain 
persons whose nationality he couldn't place were accosting him in the street. 
They had first offered him five thousand dollars and later as high as fifty 
thousand. Even with this interview, however, press coverage makes it clear that 
Hernandez is being returned as a security risk, especially in view of the escorts. 

The recruitment may have failed but we have certainly damaged the Cubans' 
operational capabilities here. The only officers they have left now are the 
Commercial Counsellor and his wife, and the Charge who we don't believe is 
engaged in intelligence work. Suddenly they're cut from five to two officers and 
must use Soviet Embassy communications facilities until they can get a new code 
clerk. The propaganda, moreover, may have improved the climate here for a 
break in relations if the Venezuelan case in the OAS prospers. If we didn't get the 
pads and debriefing, at least we got good media play and disruption. 

Perhaps indirectly related to the Hernandez case — we won't know for some 
time — are two very favourable recent developments relating to Cuban 
intelligence defections. In Canada, a Cuban intelligence officer, Vladimir 
Rodriguez, J defected a few weeks ago and is beginning to give the first details 
of the General Intelligence Directorate (DGI) which is housed within the 
Ministry of the Interior. Headquarters is keeping us up to date on the highlights 
of debriefmgs, which must be similar to the first KGB defector because nothing 
was known until now — not even the existence of the DGI. 

More closely related to Cuban operations in Uruguay is another attempt to 
defect by Earle Perez Freeman, J their former intelligence chief in Montevideo, 



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who had defected and then changed his mind in Mexico this past January. Perez 
has just obtained asylum in the Uruguayan Embassy in Havana where three of 
the four diplomats (the AMHALF agents) are working for the Miami station. One 
of these, the Charge d'Affaires, is being replaced, but through the other two, 
German Roosent and Hamlet Goncalves, } the Miami station will try for a 
debriefing on Cuban operations in Montevideo. Over the week-end I'll compile a 
list of questions based on what we already know and forward it to Miami for use 
with the AMHALF agents. 

Montevideo 6 June 1964 

The struggle within the Blanco Party has reached a new crisis just as labour 
unrest also approaches a peak. Beginning on 21 May the Cabinet ministers began 
to resign, one by one, with the Minister of Defense resigning on 30 May and 
Felipe Gil, the Minister of the Interior, today. From initial concern over the 
Canelones police case, the Blancos have turned to fighting over assignment of 
government jobs, and rumours are getting stronger by the day that Blanco 
military officers are organizing a coup against the Blanco political leadership. So 
far the rumours are unfounded but we're sending regular negative reports to 
headquarters based mostly on reports from Gari and Colonel Ventura Rodriguez 
who are closely connected with the military officers said to be involved in the 
planning. Holman is hoping to get a new Minister of the Interior who will be 
strong enough to push through the Public Safety Mission for the police. 

As the government grinds to a halt the unions of the autonomous agencies 
and decentralized services are getting more militant. Two days ago they struck 
for twenty- four hours for a 45 per cent increase in the budget for the government 
enterprises, and a twenty-four-hour general strike is already being organized by 
these unions and the CTU in protest against inflation. 

Hernandez returned to Cuba although police agents of the Rio station had 
another scuffle with Gutierrez when they separated him for an interview alone 
with Hernandez. Cuban sugar production for this year's harvest was announced 
(much lower than my Cuban sugar official, Alonzo, J told me) so FitzGerald was 
probably right. Now I'll have to terminate the safe apartment I used with him. No 
indication from Madrid yet on results of the polygraph. Miami station reported 
that getting information' from Perez in Havana may be more complicated than 
expected because they want to keep Goncalves and Roosen from working 



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together on the case. For the time being they'll use only Roosen, and he only 
comes out to Miami or Nassau about once a month. 

Montevideo 17 June 1964 

The Blancos finally solved their crisis. New ministers were announced and 
other jobs were realigned among the different disputing factions. The new 
Minister of the Interior is Adolfo Tejera J whom the Montevideo Police Chief, 
Rodriguez, describes favourably. Through the Chief, Holman will make an early 
contact with the new Minister using the AVENGEFUL telephone-tapping 
operation as the excuse and following with the AID Public Safety programme 
later. 

Today practically all economic activity is stopped thanks to a twenty-four- 
hour general strike, organized by the CTU and the unions of the government 
autonomous agencies and decentralized services, on account of inflation and 
other economic ills that adversely affect the workers. Last night, as the strike was 
about to start, Colonel Rodriguez, J Montevideo Police Chief and the 
government's top security official, issued a statement denouncing the wave of 
rumours of a military takeover as completely unfounded. 

How different from Ecuador where a general strike is enough to bring down 
the government. Here traffic circulates freely and almost everyone, it seems, goes 
to the beach even if it's too cold to swim. Holman, in commenting on the Sunday- 
like atmosphere, said that Uruguayans are nothing more than water-watchers — 
content to sip their mate quietly and watch the waves roll in. 

The Brazilian government is keeping up the pressure for action against 
political activities by Goulart, Brizola and other exiles. Although they have 
begun to allow some of the asylees in the Uruguayan Embassy to come out, 
which has temporarily relieved tension, they have also sent a Deputy here for a 
press conference to try to stimulate action for control of the exiles. But the 
Deputy's remarks were counter-productive because in addition to accusing 
supporters of Goulart and Brizola of conspiring against the military government 
through student, labour and governmental organizations in Brazil, he also said 
that Uruguay is infiltrated by communists and as such is a danger for the rest of 
the continent. The Uruguayan Foreign Minister answered later by acknowledging 
that the Communist Party is legal in Uruguay, but he added that the country is 
hardly dominated by them. 



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Brazilian pressures may create negative reactions in the short run but sooner 
or later the Uruguayans will have to take a similar hard line on communism 
because the country's just too small to resist Brazil's pressure. As an answer, I 
suppose, to Holman's resistance on covering the exiles, the Rio station has 
decided to send two more of its agents to the Brazilian Embassy here — in 
addition to the military attache, Colonel Camara Sena. } One is a high-level 
penetration of the Brazilian Foreign Ministry, Manuel Pio Correa, J who is 
coming as Ambassador, and the other is Lyle Fontoura, J a protege of Pio, who 
will be a new First Secretary. Until last month Pio was Brazil's Ambassador to 
Mexico where, according to the background forwarded by the Rio station, he was 
very effective in operational tasks for the Mexico City station. However, because 
Mexico hadn't recognized the new military government, Pio was recalled, and the 
Rio station arranged to have him reassigned to Montevideo which at the moment 
is the Brazilian government's diplomatic hot spot. When they arrive Holman will 
handle the contact with Pio while O'Grady works with Fontoura. One way or 
another the Rio station is determined to generate operations against the exiles, 
and Pio apparently is the persistent type who will keep up pressure on the 
Uruguayan government. 

Montevideo 28 June 1964 

The Miami station is having trouble getting information out of Earle Perez 
Freeman, the Cuban intelligence officer who is in asylum in the Uruguayan 
Embassy in Havana. After several attempts at elicitation by German Roosen, one 
of the Uruguayan diplomats working for the Miami station, Perez accused him of 
working for the CIA and demanded that the CIA arrange to get him out of Cuba. 
He told Roosen that he will not reveal anything of Cuban operations in Uruguay 
until he is safely out of Cuba. 

One of Roosen's problems is that he is unable to pressure Perez very 
effectively without instructions from the Foreign Ministry here. He denied, of 
course, Perez's accusation of his connections with us, but is reluctant to proceed 
without some instructions from his government. Holman agreed that I propose to 
Inspector Piriz that he go to Miami to provide official guidance to Roosen — but 
without Roosen knowing that Piriz is in contact with us. When I spoke to Piriz he 
liked the idea but cautioned that Colonel Rodriguez, the Chief of Police, should 
authorize his trip and coordinate with the Foreign Ministry. 



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Holman proposed to Rodriguez that he send one of his best officers to Miami 
to work with Uruguayan diplomats who are in contact with Perez in the Embassy, 
but without revealing either our contacts with Piriz or Roosen. As expected 
Rodriguez accepted the idea, obtained Foreign Ministry endorsement, and 
nominated Piriz. In a few days now, Piriz will go to Miami to give official 
guidance both to Roosen and to Goncalves, the other Uruguayan diplomat in 
Havana working for the Miami station (Ayala Cabeda had previously been 
transferred from Havana and was no longer used by the Agency). The Miami 
officer in charge will be meeting Roosen, Goncalves and Piriz separately, all of 
which seems cumbersome and inefficient, but we must protect the contact we 
have with each from being known by the others. In any case Roosen and 
Goncalves will have official encouragement for pressure against the Cuban 
intelligence officer. We've got to get information from him before any break in 
relations removes the diplomat-agents from Havana. 

The campaign for isolating Cuba is another step closer to success. The OAS 
announced that sufficient votes have been obtained for a Conference of Foreign 
Ministers to consider the arms cache case and the Venezuelan motion that all 
OAS members still having relations with Cuba break them. Still no sign, 
however, that Uruguay will support the motion or break even if the motion is 
passed. 

Propaganda against Cuba continues through the AVBUZZ media project. 
Among the many current placements are those of the canned propaganda 
operation, Editors Press Service, J which is based in New York and turns out 
quantities of articles against the Castro government and communism in general, 
much of which is written by Cuban exiles like Guillermo Martinez Marquez. J 

Montevideo 15 July 1964 

The coup rumours have subsided since the general strike last month but 
several strikes have continued. Headquarters sent down a strange dispatch that 
Holman believes is a prelude to getting back into political-action operations. 
According to him the dispatch, although signed as usual by the Division Chief, 
was actually written by Ray Herbert } who is Deputy Division Chief and an old 
colleague of Holman's from their days in the FBI. In rather ambiguous terms this 
dispatch instructs us to expand our contacts in the political field to obtain 
intelligence about political stability, government policy concerning activities of 



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the extreme left, and possible solutions to current problems such as constitutional 
reform. Holman believes that Herbert deliberately did not mentioned political- 
action operations (as opposed to political-intelligence collection) but that the 
message to prepare for renewal of these operations was clearly implied. 

For preliminary organization Holman has given me the responsibility for 
reporting progress and for developing new political contacts. He will increase 
somewhat his meetings with Mrs. Nardone and with Gari and soon will introduce 
me to yet another Ruralista leader, Wilson Elso, } who is a Federal Deputy. We 
will not make contact with the other principal Ruralista leader, Senator Juan 
Maria Bordaberry, because he is already in regular contact with Ambassador 
Coerr, and Holman wants no problems with him. The importance of the 
Ruralistas is that they have already announced support for constitutional reform 
in order to return Uruguay to a strong one-man presidency. The other parties are 
openly opposed to such reform. 

*** 

In addition to the Ruralistas, Holman asked me to arrange with one of the 
legitimate political section officers to begin meeting some of the more liberal 
leaders of the Colorado Party, mainly of the List 15 and the List 99. These two 
factions will be in the thick of the elections coming up in 1966, and they also 
constitute an attractive potential for access agents in the Soviet operations 
programme. 

For purposes of political reporting Holman will also have his new contact 
with Adolfo Tejera, J the Minister of the Interior with Colonel Ventura 
Rodriguez, the Chief of Police, and with Colonel Carvajal, Chief of Military 
Intelligence. For the time being he will refrain from reinitiating contact with 
Colonel Mario Aguerrondo } who was Rodriguez's predecessor as Chief of 
Police and a close station liaison collaborator, because Aguerrondo is usually at 
the centre of rumours of a move by Blanco military officers against the 
government. Also O'Grady will meet more regularly with Juan Carlos Quagliotti, 
} the wealthy rancher and lawyer who is active in promoting interventionist 
sympathies among military leaders. 

In discussing expansion of political contacts Holman said we have to be very 
careful to avoid giving the Ambassador any reason to suspect that we're getting 
back into political-action operations. When the time comes, he said, the decision 



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will be made in Washington and the Ambassador will be informed through 
department channels. 

This is bad news. All the work with political leaders in Quito only 
emphasized how venal and ineffectual they were and in Uruguay the politicians 
seem to be even more so. I couldn't be less enthusiastic. I don't want to cultivate 
senators and deputies — not even for the Director. 

Montevideo 20 July 1964 

Another purchase of Chilean currency at the Montevideo branch of the First 
National City Bank for shipping by pouch to the Santiago station. This time the 
Finance Officer who is in charge of the purchasing operations in Lima and Rio 
came to Montevideo to assist in the pick-up from Hennessy J and to count the 
escudos afterwards. This one was also worth over 100,000 dollars and, according 
to the Finance Officer, is only a drop in the bucket. He says we are spending 
money in the Chilean election practically like we did in Brazil two years ago. 

We've had serious trouble in the AVENGEFUL/AVALANCHE telephone- 
tapping operation. AVOIDANCE, { the courier who takes the tapes around to the 
transcribers, reported to Paul Burns, his case officer, that a briefcase full of tapes 
was taken from the trunk of his car while he was on his rounds making pick-ups 
and deliveries. AVOIDANCE has no idea whether the tapes were taken by a 
common thief or by the enemy. Although he claims he has been very careful to 
watch for surveillance (negative), the chances are that the tapes will be listened 
to, even if only stolen by a thief, in order to determine saleability. 

After a discussion with Holman and Burns, I advised Commissioner Otero 
and Colonel Ramirez, Chief of the Metropolitan Guard, that we had lost some 
tapes and believe all the lines except the Cuban Embassy should be disconnected. 
Ramirez agreed that the Cuban line should be retained because of our coming 
OAS meeting and the possibility of a break in relations with Cuba. He is also 
going to keep several of the contraband lines in operation for cover, although 
there is no way of denying the targets of the lost tapes. 

For the time being AVOIDANCE will be eliminated from the operation 
although he will go through the motions of a daily routine very similar to normal 
while continuing to watch for surveillance. The tapes of the Cuban line will be 
sent over to the station with the daily police intelligence couriers and we will 
give them to Tomas Zafiriadis } who is an Uruguayan employee of the Embassy 



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Commercial Section. He will serve as courier between the station and his wife 
(AVENGEFUL-3) J who transcribes the Cuban Embassy line. His wife's sister 
(AVENGEFUL-5), J the transcriber of the PCU Headquarters line, will also help 
on the Cuban Embassy line since her line is being disconnected. Using an 
Embassy employee like this is-against the rules but Holman is willing to risk the 
Ambassador's wrath to keep the Cuban Embassy line going. 

Montevideo 25 July 1964 

News is in that the OAS passed the motion that all members should break 
diplomatic and commercial relations with Cuba and that except for humanitarian 
purposes there should be no air or maritime traffic. It took four years to get this 
motion passed — not only CIA operations but all our Latin American foreign 
policy has been pointing to this goal. The countries that still have relations, Chile, 
Mexico and Uruguay, voted against the motion, while Bolivia abstained. Whether 
Uruguay or any other of these countries honour the motion or not is another 
matter but headquarters' propaganda guidance is certain to call for an all-out 
campaign to force compliance with the motion. 

Perhaps with the vote to break relations the AMHALF agents in the 
Uruguayan Embassy in Havana, Roosen and Goncalves will be able to get 
information out of Perez Freeman. Even with the assistance of Inspector Piriz in 
Miami, the Uruguayan diplomats still were unable to exert enough pressure to 
force Perez to begin talking about Cuban operations in Montevideo. We need the 
information to support the campaign for a break by Uruguay with Cuba through 
Perez's revelations of Cuban intervention here. We could alternatively write our 
own document based on a little fact and a lot of imagination and attribute it to 
Perez, whose presence in the Embassy is public knowledge. Such a document 
could backfire, however, if Perez had actually been sent by the Cubans to seek 
asylum — this suspicion grows as he continues to refuse to talk — because after the 
document was surfaced Perez could escape from the Embassy and issue a public 
denial through the Cuban authorities. For the time being Inspector Piriz will 
return and we will hold up the false document project until we see how our media 
campaign progresses without it. 

Station labour operations limp along with Jack Goodwyn J and the AIFLD J 
in the lead. This week we had a visit from Joaquin (Jack) Otero, J the 
representative of the International Transport Workers' Federation J (ITF) who 



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worked with me in Quito last year. Otero is now the chief ITF representative for 
all of Latin America and the Caribbean, and he came to assist in a boycott against 
meat exports by non-union packing plants. The hope is that his assistance will 
help strengthen the democratic unions involved. 

Agency-sponsored trade-union education programmes through ORIT are 
being expanded. Through the ICFTU International Solidarity Fund, headquarters 
is pumping in almost 200,000 dollars to establish an ORIT training school in 
Cuernavaca. Until now the ORIT courses have been limited by the space made 
available in Mexico City by the Mexican Workers' Confederation J which is the 
most important ORIT affiliate after the AFL-CIO. Opening of the Cuernavaca 
school is still a year or two away but already the ORIT courses have become an 
effective combination with the AIFLD programme in Washington. 

As if we don't have enough problems with Argentines, Paraguayans and 
Brazilians now we have Bolivians to worry about. A week or so ago the new 
Bolivian Ambassador, Jose Antonio Arce, J arrived and the La Paz station asked 
that we keep up their relationship with him. He has been in and out of various 
government jobs since the Bolivian revolution, most recently as Minister of the 
Interior when he worked, closely with the La Paz station. Holman will be seeing 
him from time to time, probably no more than is absolutely necessary, so that 
when he returns to La Paz this important supporter of President Paz Estenssoro 
can be picked up again for Bolivian operations. 

Arce's main job here will be to watch the supporters of former Bolivian 
President Hernan Siles Suazo, and Siles himself if he settles in exile in 
Montevideo as is expected. Siles aspires to succeed current President Victor Paz 
Estenssoro in keeping with their custom, since the revolution of 1952, of 
alternating in the presidency. Paz, however, against the tradition, was re-elected 
in May and must now contend with Siles's plots against him. The La Paz station 
is anxious to prevent Siles from returning to the presidency !n Bolivia because of 
his recent leftward trends, and his friendly relationship with the Soviets when he 
was Bolivian Ambassador in Montevideo during 1960-62. As an initial move to 
support the La Paz station I have asked Commissioner Otero, Chief of Police 
Intelligence, to make discreet inquiries about Siles' plans among his political 
friends and to watch for signs that he will be settling here. 



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Montevideo 11 August 1964 

Uruguayan compliance with the OAS resolution on Cuba looks very 
doubtful. The Foreign Minister on his return from Washington announced that the 
NCG will now have to decide whether the OAS resolution should be passed to 
the UN Security Council for approval before it can be considered binding. This is 
only a delaying manoeuvre to avoid a difficult decision but the most damaging 
developments are that Mexico has announced that it will ignore the resolution 
and Bolivia is undecided. Unless Uruguay can be made to seem isolated in its 
refusal to break, the chances are not good. Moreover, although we have 
intensified our propaganda output on the Cuban issue through ABBUZZ-1 
considerably, it's no match for the campaign being waged by the extreme left 
against breaking relations, which has been carefully combined with the campaign 
against the government on economic issues. 

Today the National Workers' Convention (CNT), formed only a week ago as 
a loosely knit coordinating organization of the CTU and the government workers, 
is leading another general strike. Again most of the country's economic activity 
has stopped: transport, bars, restaurants, port, construction, wool, textiles, service 
stations, schools and many others. The strike was called to show support for 
continued relations with Cuba, admittedly a political purpose, but not 
unprecedented in Uruguay. 

Apart from the strike today, the formation of the CNT is a very significant 
step forward by the communist-influenced trade-union movement, because, for 
the first time, government workers in the Central Administration (the ministries 
and executive) and the autonomous agencies and decentralized services are 
working in the same organization as the private-sector unions of the CTU. With 
continuing inflation and currency devaluation (the peso is down to almost 23 per 
dollar now) the CNT will have plenty of legitimate issues for agitation in coming 
months. Besides the Cuban issue the CNT campaign is currently targeted on pay 
rises, fringe benefits and subsidies to be included in the budget now being drawn 
up for next year. 

Montevideo 21 August 1964 

Through the AVBUZZ media operation we're getting editorials almost daily 
calling for Uruguayan compliance with the OAS resolution to break with Cuba. 



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President Alessandri in Chile has done this already, instead of waiting until after 
the elections. Today Bolivia announced it is breaking in accordance with the 
resolution, leaving only Uruguay and Mexico still with ties to Cuba. 

The NCG will surely buckle under such isolation, but getting decisions here 
is cumbersome. On important matters, the majority NCG members decide their 
position only after prior decisions within each of the Blanco factions represented 
on the NCG. Likewise the Colorado factions must decide. Eventually the NCG 
meets to formalize the positions taken by each faction earlier and a decision may 
emerge. In the case of Cuban relations the Foreign Minister has yet to present his 
report on the OAS Conference and related matters even with a month already 
passed since the Conference. 

For additional propaganda, we have arranged for Juana Castro, | Fidel's 
sister, to make a statement favouring the break during a stopover next week at the 
Montevideo airport. She defected in Mexico this June and is currently on a 
propaganda tour of South America organized by the Miami station and 
headquarters. We'll get wide coverage for her statement, and a few days later still 
another Miami station agent will arrive: Isabel Siero Perez, J important in the 
International. Federation of Women Lawyers, } another of the CA staffs 
international organizations. She'll describe the Havana horror show and 
emphasize the Soviets' use of Cuba as a base for penetration throughout the 
hemisphere. 

Montevideo 31 August 1964 

The Montevideo association of foreign diplomats recently held their monthly 
dinner and Janet and I went along with several others from the Embassy. By 
chance we began a conversation with two of the Soviet diplomats and later joined 
them for dinner. I wrote a memorandum for headquarters on the conversation — 
one of the Soviets, Sergey Borisov, is a known KGB officer — and Holman later 
asked me to keep up the contact and see if Borisov is interested. Russell Phipps, 
J our Soviet operations officer, isn't the outgoing type and Holman is clearly not 
pleased with Phipps's failure to recruit any decent new access agents. 

I'll go to the diplomatic association meeting next month but I'm not keen on 
getting deeply into Soviet operations. Just keeping the telephone transcripts 
analyzed and the files up to date is deadly dreary and requires far too much desk 



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work. We shall see if Borisov is interested in continuing the contact — he's the 
Consul and lives in the Soviet side of the AVERT house. 

I decided to try another Cuban recruitment with the possibility that the 
spectre of a break in relations might help us. The target was Aldo Rodriguez 
Camps, the Cuban Charge d'Affaires in Montevideo, whose father-in-law is an 
exile living in Miami. Last year the Miami station sent the father-in-law, 
AMPIG-1, } down to Montevideo to discover the political views on Castro and 
communism of the Charge and his wife. He felt from his conversation that 
neither seemed to be particularly ardent communists although they were clearly 
loyal to the Cuban revolution. At that time it was decided not to try for the 
recruitment or defection of either Aldo or Ester but to wait for a future date. 

At my request the Miami station proposed to the father-in-law that he come 
back to Montevideo as soon as possible for a more direct approach to his 
daughter, who appeared to be the more susceptible of the two. If Ester had agreed 
to defect we would have made arrangements to evacuate her to Miami, but only 
after she had had a few days to work on Aldo. The key to Aldo, the Charge, is 
their two young children, to whom he is very attached and when confronted with 
their flight to Miami he just might have decided to come along. 

Unfortunately, this recruitment failed. The father-in-law came as planned and 
made the initial meeting with his daughter but she cut him off at the beginning 
and refused any discussion of defection. After two days he went back to Miami, 
sad and broken, with no idea if he'll ever see his daughter and grandchildren 
again. 

Montevideo 4 September 1964 

The main Blanco and Colorado newspapers are carrying a torrent of 
AVBUZZ-sponsored articles and statements calling for the government to heed 
the OAS resolution. However, manoeuvring among the different Blanco and 
Colorado NCG members and their factions is causing the outlook on the break 
with Cuba to change almost daily. In the past three days there have been a 
meeting of the NCG Foreign Relations Commission that was scheduled but didn't 
convene for lack of quorum, new scheduling of debate by the full NCG for 10 
September, and finally last night an NCG decision to consider the OAS 
resolution at a special meeting on 8 September. So far only two of the NCG 
members have indicated how they'll vote — one for and one against — and there is 



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a good chance we'll lose. Nevertheless, relations with Brazil are again at crisis 
point, and the thesis that Uruguay must go along with the majority in order to 
assure protection against pressures from Argentina or Brazil is gaining ground. 

If they don't break relations this week, I'll write the 'Perez Freeman Report' 
right away and we'll make it public either through Inspector Piriz or the 
AMHALF agents, Roosen or Goncalves. The Foreign Minister, who is against 
the break, is the first guy I'll burn as a Cuban agent — he probably is anyway. 

Returns from the elections in Chile today show Eduardo Frei an easy winner 
over Allende. Chalk up another victory for election operations. Allende won't be 
a threat again for another six years. 

Montevideo 8 September 1964 

A great victory. Forty-four days after the OAS resolution on Cuba the NCG 
has voted to comply. How the vote would go wasn't known for sure until the last 
minute when the N CG President changed his position and carried a Counsellor 
from his faction with him. Final vote: six in favour of breaking (five Blancos and 
one Colorado) and three against (one Blanco and two Colorados). 

While the Councillors were debating several thousand pro- Cuban 
demonstrators gathered in Independence Plaza in front of Government House 
where the N CG was meeting. When the vote was announced a riot was on, and 
the crowd surged down the main street, 18 de Julio, breaking store fronts and 
clashing with the anti-riot Metropolitan Guard and the mounted Republican 
Guard. At least ten police were injured and twenty-six demonstrators arrested 
before the water cannons and tear-gas dispersed the mob. Somehow many of the 
demonstrators got back to the University buildings further down 1 8 de Julio, and 
right now the battle is continuing there with stones and firecrackers being hurled 
from the roof of the main University building. 

I'm spending the night in the station just in case anything drastic happens that 
has to be reported to headquarters. Tomorrow we'll see if any of the Cubans can 
be picked off before they leave for home. 

Montevideo 10 September 1964 

Rioting continues, mostly centred at the University of the Republic buildings 
on 18 de Julio. Although some demonstrators abandoned the University during 



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the early morning hours yesterday at the urging of Colonel Rodriguez, J Chief of 
Police, and Adolfo Tejera, J Minister of the Interior, new riots began yesterday 
morning at about ten o'clock and have continued since. The demonstrators' tactics 
include, besides the throwing of stones from the University buildings, lightning 
street riots at different places to throw the police off guard. Shop windows and 
cars parked at our Embassy have also been stoned. 

During the early hours of this morning, several US businesses were attacked. 
A powerful bomb exploded outside the First National City Bank shattering the 
huge plate-glass windows and causing the hanging ceiling in the lobby to fall. 
Another bomb exploded at the Western Telegraph Company while an incendiary 
device started a fire at the Moore-McCormick Lines offices. General Electric's 
offices were also damaged. 

The Cubans advised the Foreign Ministry that they'll be leaving on Saturday 
for Madrid. Last night with Roberto Musso, } the chief of the AVENIN 
surveillance team, I tried to talk to the new code clerk by telephone. Musso, 
using the name of someone we already know is in contact with the code clerk, 
got him on the telephone and passed it to me. I said I was a friend of Roberto 
Hernandez, his predecessor, and would like to make a similar offer of assistance. 
He told me to kiss his ass and hung up, but I'll try again if I have time after I've 
done the same with the other three — two of whom are new arrivals since the 
Hernandez episode. 

The Cubans may have made, a serious mistake yesterday, in their haste to tie 
up loose ends before leaving. They sent the chauffeur, my agent, to send a 
telegram to Tucuman, Argentina with the message, 'Return for your cousin's 
wedding'. This can only be a code phrase and the urgency attached to sending the 
telegram led the chauffeur to conclude that someone is being called for a meeting 
before Saturday. I've passed the addressee and address by cable to the Buenos 
Aires station for follow-up and will watch carefully the air and riverboat 
passenger lists for this and other names of possible Cuban agents. We know 
nothing about the person this was addressed to, but he is probably involved in the 
guerrilla activity in the Tucuman area. 

Montevideo 11 September 1964 

Demonstrators continue to occupy the University and bombings have 
occurred at the OAS offices, the Coca-Cola plant, newspapers that promoted the 



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break {El Dia, El Pais and El Plata), the homes of four councillors who voted for 
the break, and several of the neighbourhood clubs of the factions that favoured 
the break. At the University, which is still sealed off by police, minors were 
allowed to leave and the Red Cross entered with doctors to distribute blankets 
and examine the students, who were suffering from cold and hunger. Any who 
decide to leave, however, will have to be registered, identified and face possible 
arrest. Colonel Rodriguez's plan is to trap all the non-students among the 400 or 
so people occupying the University. 

Not to be outdone by the students and political demonstrators, the municipal- 
transit system workers struck for three hours this afternoon and the workers of 
the autonomous agencies and decentralized services staged a huge demonstration 
at the Legislative Palace. Again the issue was budget benefits. 

I've spoken to all but one of the Cubans and none has been willing to meet 
me. One of them last night invited me to the Embassy for coffee but I thought it 
prudent to decline in spite of the freezing wind howling through the telephone 
booth. When they leave tomorrow I'll be at the airport just in case — as will Otero, 
% Piriz J and other police officers who can take charge if a last-minute defection 
occurs. 

Montevideo 12 September 1964 

This morning the demonstrators at the University surrendered and were 
allowed to leave after fingerprints, identification photographs and biographical 
data were taken. Forty-three nonstudents were arrested among the 400 who came 
out. 

At the airport this afternoon several thousand demonstrators came together to 
bid the Cubans farewell. When the police began to force the demonstrators back 
to a highway some distance from the main terminal building another riot broke 
out followed by a pitched battle. The police won easily, using the cavalry 
effectively in the open areas around the terminal building, but many were injured 
on both sides. 

All the Cubans left as scheduled. Only one remains behind: the Commercial 
Counsellor, who is being allowed to stay on for a couple of weeks to close a 
Cuban purchase of jerked beef. 

Of all the Latin American and Caribbean countries only Mexico still has 
relations with Cuba. If Mexico refuses to break, as seems likely, the Mexican 



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channel could be used for various operational ploys against Cuba — it's even 
possible that the Mexican government was encouraged by the station there not to 
break with Cuba. Here we've done our job, but poor O'Grady will be working 
until the end of the year to send headquarters all the clips on Cuba we've 
managed to place in the media. 

Efforts by the Miami station to get information out of Earle Perez Freeman 
through the Uruguayan diplomats, Roosen and Goncalves, have ended, as these 
agents are returning to Montevideo. Although Switzerland is taking charge of 
Uruguayan affairs in Havana the Uruguayan Charge is staying to close the 
Embassy and to transfer the eight remaining asylees, including Perez Freeman, to 
another Embassy. According to the Miami station Goncalves is too insecure and 
frivolous to consider incorporating into other operations so I've asked them to 
forward a contact plan for Roosen only. Just possibly he could develop a 
relationship with a Soviet officer here, but this will depend on a careful analysis 
of the possibility that he was known by the Cubans to be working with us. 

No sooner do we get the Cubans out than the Chinese communists try to 
move in. Only yesterday the Foreign Minister told a reporter that the Chicoms 
have asked permission to set up a trade mission in Montevideo and that as far as 
he is concerned it would be all right. Holman gave O'Grady the responsibility for 
following this one up but as in the case of the Brazilians the details are mine 
because we'll use the police intelligence office to get more information. 

Manuel Pio Correa, J the new Brazilian Ambassador, arrives tomorrow. He is 
pointedly visiting Brazilian military units along the Uruguay-Brazil border on his 
way here. Holman will establish contact with him next week. 

Montevideo 16 September 1964 

In spite of the intensity of station operations against the Cubans and other 
matters like the Brazilians, and local communist gains in the trade-union field we 
have a serious morale problem that's getting worse as weeks go by. In most 
stations, I suppose, the day to day demands of work keep personal dissentions to 
a minimum because one doesn't have the time or energy to feud. But here the 
problem is with Holman and everyone in the station is affected. 

The problem is that Holman expects all the station officers to give 
outstanding performances in their particular areas of responsibility but he's not 
willing to exert very much effort himself. Besides that he is a great player of 



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favourites, and for better or worse he's chosen me as his favourite. He invites me 
to lunch several days each week and practically insists that I play golf on 
Saturday afternoons with his crowd out at the Cerro Club even though I've made 
it clear I'm not enthusiastic. When we're alone he speaks derisively of the other 
station officers, especially O'Grady, Phipps and Zeffer. O'Grady, in fact, has 
turned into a bundle of nerves under Holman's criticism, which he's sure is the 
cause of his increasingly frequent attacks of hives. Usually Holman's criticisms 
are about shortcomings in language or failure to make new recruitments but 
sometimes he even criticizes the wives. 

His attitude would be understandable, perhaps, if his own work habits were 
more inspiring, but he avoids work as much as possible and requests from other 
stations like Rio or La Paz or Buenos Aires seem like personal insults to him. Just 
the other day when we were playing golf, Holman told me that in fact he was 
rather relieved when the recruitment of Hernandez, the Cuban code clerk, failed. 
He said he came to Montevideo for a relaxing last four years before retiring and 
only hoped to keep operations to a minimum and the Ambassador happy. If 
Hernandez had been recruited, headquarters would have bothered us constantly 
with advice and probably would have sent down' experts' to tell us how to run the 
operation. 

Holman is not only determined to keep operations to a minimum. At night or 
on week-ends when priority cables are received or have to be sent Holman 
refuses to go to the station to take action. He either sends O'Grady in to bring the 
cable out to his house in Carrasco — against all the rules of security — or he has 
the communications officer bring it out to him. If another officer has to take 
action he simply calls that officer to his house. 

I'm not sure what to do since I'm the only officer Holman thinks is doing a 
good job — nothing to be proud of, it could even be the kiss of death. Warren 
Dean told me before leaving Quito that Holman isn't considered one of the more 
outstanding Chiefs of Station in the Division, but he's apparently protected by 
Ray Herbert, the Deputy Division Chief, who is Holman's best friend. 

Montevideo 25 September 1964 

Today the Congress approved the new budgets for the state-owned banks 
with provisions for a 30 per cent salary increase retroactive to January of this 
year plus improved fringe benefits. Political motivation prevailed at the last 



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moment 'ven though the NCG had previously rejected such generous increases, 
which is not to say they aren't justified when inflation is taken into account. The 
main problem is that this increase of 30 per cent will set the standard for 
demands by all the other government employees which in turn will accelerate 
inflation with new budget deficits. 

The new National Workers' Convention, heavily influenced by the PCU, is 
also intensifying its efforts to unify the government and private-sector workers 
through a series of rallies and marches in coming weeks, culminating in a mass 
meeting in early December to be called the Congress of the People with 
representation from the trade unions and other popular mass organizations. At the 
Congress of People they will formulate their own solutions to the problems 
afflicting this country — not a bad idea what with the mess they're in. 

Relations between Uruguay and Brazil are back at boiling-point. Police in 
Porto Alegre, the capital of the Brazilian state bordering Uruguay, have just 
discovered a new plot by Goulart and his supporters to foment a communist- 
oriented takeover. A written plan, supposedly found on a university student, 
included the formation of terrorist commando units. Earlier, another plot was 
discovered in Porto Alegre involving Army officers loyal to Goulart. Here in 
Montevideo, the 300 Brazilian exiles have formed an association to help those 
unable to get along financially. However, at the first meeting considerable 
discussion was devoted to ways in which the military government could be 
overthrown, and Brizola's wife, who is Goulart's sister, was elected to the 
association's governing board. 

In tracking down the possibility that the Chinese communists will establish a 
trade mission here, we discovered that permission has in fact been granted, not to 
the Chinese but to the North Koreans. They have just arrived and are taking a 
house on the same street as the Soviet Legation. Holman asked Tejera, J the 
Minister of the Interior, what could be done to keep them from staying 
permanently, but Tejera made no promises. Already head-quarters is asking for a 
programme to get them thrown out. 

Two recent developments of note have occurred in our otherwise stagnated 
student operations. A new publication aimed at university and secondary students 
is now coming out: it's called Combate % and is published by Alberto Roca. % 
Also, at the Alfredo Vazquez Acevedo Institute, which is the secondary school 
associated with the University and as such the most important on that level, the 
student union supported by the station has just defeated the FEUU-oriented 



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candidates for the fifth straight time. Sooner or later our work with this group, the 
Association of Preparatory Students, J is bound to be reflected in the FEUU. 

Montevideo 29 September 1964 

Montevideo was alive with new rumours this morning that senior Blanco 
military officers are planning a coup against the government. Cause of the 
rumours is a dinner given last night by Juan Jose Gari, the long-time station agent 
in the Ruralist League and currently President of the State Mortgage Bank, in 
honour of Mario Aguerrondo, % former Montevideo Police Chief, who was 
recently promoted from Colonel to General. Among the guests at the dinner were 
other Ruralista leaders and practically all of the top military commanders from 
the Minister of Defense down. Holman checked out the rum ours with Gari and 
with Adolfo Tejera, the Minister of the Interior, while I checked with Colonel 
Roberto Ramirez, Chief of the Metropolitan Guard, who was also there. The 
dinner was simply an expression of homage to Aguerrondo but the rumours, 
entirely unfounded, reveal just how nervous people are that a military takeover 
may occur, what with the increasing strength of the PCU-dominated unions and 
the government's incapacity to slow inflation. New strikes are being planned. 

Holman thinks he has at last got agreement from the Minister of the Interior, 
Adolfo Tejera, for setting up a Public Safety mission for work with the police 
under AID. For some time Colonel Rodriguez, the Chief of Police, has wanted 
the programme but the delicate question of foreigners working openly with the 
police has caused Tejera to delay his decision. No wonder Tejera has now finally 
decided. He has just testified before the Budget Commission of the Chamber of 
Deputies that his ministry is too poor to buy paper, the police lack uniforms, 
arms, transport and communication, and the fire departments lack hoses, 
chemicals, trucks and other equipment. 

It's not just a question of money and equipment for the police; they are also 
very poorly trained. Not only are bank robberies frequent, for example, but 
successful escapes often involve not only stolen cars but motor scooters, 
bicycles, trucks, buses — even horses. In one recent robbery the getaway car 
wouldn't start so the robbers simply walked down the street to the beach and 
disappeared into the crowd. In August four thieves were caught robbing a house 
on the coast near Punta del Este but escaped to the nearby hills, and after a two- 
day gun battle they slipped through a .cordon of several hundred police. Their 



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escape car, however, got stuck in the sand and they walked down the beach, 
robbed another house, were again discovered, but this time escaped in a rowing- 
boat. For six days the police chased them in cars, helicopters and on foot but they 
finally escaped completely — carrying their loot on their backs as they rode their 
bicycles down the main highway into Montevideo. 

The competence of the AVALANCHE service is similarly limited in its 
attempts to suppress terrorist activities. Undoubtedly some of the bombings at the 
time relations with Cuba were broken were the work of the terrorist group led by 
Raul Sendic. Last March Sendic returned from several months in hiding in 
Argentina after an arms theft from a shooting club in Colonia. He arrived in a 
light aircraft at a small airport near Montevideo, but when discovered he simply 
rushed past the police guard and escaped in a waiting truck. The following month 
4000 sticks of dynamite were stolen from a quarry and a few days later enough 
caps and fuses to explode it disappeared from another site. All the police could 
report was that these thefts may have been the work of the Sendic band. 

Building up the police is like labour operations — we're still at the beginning 
with a long road ahead requiring training, equipment, money and lots of patience. 

Montevideo 7 October 1964 

This is the final day of the forty-eight-hour strike in the autonomous agencies 
and decentralized services. Only the electric company and the state banks have 
been operating although the banks have been stopping work for one hour each 
shift in solidarity with the others. Yesterday the striking government workers, 
CNT unions and FEUU held a demonstration at the Legislative Palace to demand 
salary increases equivalent to the 30 per cent won two weeks ago by the 
government bank workers. 

Two days ago all the privately owned gasoline stations were closed 
indefinitely in an owner's strike against the government for a higher profit margin 
from the state-owned petroleum monopoly, ANCAP, which also has a large 
number of gasoline stations. As the ANCAP workers are participating in the 
forty-eight-hour government workers' strike, no stations were open yesterday or 
today. More strikes and demonstrations coming up: teachers, the ministries, 
postal workers and some unions in the private sector. 



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Montevideo 17 October 1964 

Commissioner Otero and others have had a stroke of luck against the Sendic 
group of terrorists. Two leaders of the group, Jorge Manera, an engineer in the 
electric company, and Julio Marenales, a professor in the School of Fine Arts, 
were arrested in an unsuccessful bank robbery. They confessed that their purpose 
was to aid the sugar-cane workers of Bella Union and that the focal point for their 
activities is the School of Fine Arts. Police seized arms and are searching for two 
other members of the group. Otero's leads from these arrests are very important 
because this is the only active armed group. If he can get good information from 
the interrogations we may be able to target some recruitment operations against 
them. So far they've been completely underground. 

We've decided to hook up the AVENGEFUL lines again on the Soviets and 
the PCU. I'll also put a line on Prensa Latina and another on the Czech Embassy 
which has taken over the Cubans' affairs. If the transcribers can manage I'll also 
put a tap on the telephone of Sara Youchak, a young activist in the FIDEL 
political front who has all the marks of being a Cuban intelligence agent. 

Still no sign of who was behind the theft of the tapes from AVOIDANCE'S 
car. He'll now take over the courier duties again so that we can stop using the 
Embassy employee. Colonel Ramirez, Chief of the Metropolitan Guard, is really 
happy about AVENGEFUL. A few days ago his men, acting on data from 
telephone taps, intercepted a truck containing 600 transistor radios that had been 
off-loaded from a light aircraft running contraband from Argentina. The 300,000 
pesos that the haul is worth will be divided among Ramirez and his men. 

Meanwhile the government announced that they simply had no money to 
start paying September salaries — even the police and the Army, always the first 
to be paid — have received nothing for September. Nevertheless, the NCG has just 
approved the 30 per cent increase for employees of the state-owned telephone, 
electricity and petroleum monopolies. 

Montevideo 25 October 1964 

Perez Freeman has been killed trying to escape from the Uruguayan Embassy 
in Havana! The story was carried in wire-service reports this morning and said 
that he had been trying to hold the Uruguayan Charge, who is still trying to 
arrange for another Embassy to take over the asylees, as hostage. The Miami 



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station is attempting to check the story but no confirmation so far. If only the 
Mexico City station had handled his defection correctly in January we would 
have all his information and he'd be basking in the Miami sun. 

Montevideo 31 October 1964 

On the Perez Freeman case the Foreign Ministry received what is being 
called the longest cable in its history — some 1300 groups in code from the 
Embassy in Havana. The communications office of the Foreign Ministry, 
however, was unable to decode it for 'technical' reasons — meaning, probably, that 
too much effort was involved — so the Foreign Minister called the Embassy by 
telephone to get the story the Charge had put in the cable. 

Perez Freeman, according to the Charge, was the leader of a group of four 
asylees who took the Charge hostage and escaped from the Embassy in the 
Charge's car. Cuban security forces gave chase and when the escaping group 
arrived at a roadblock Perez Freeman jumped out of the car and was shot running 
away. The others were taken to the fortress where executions are normally held. 
I've asked the Miami station to try to verify the Charge's version. 

Hernan Siles Suazo, the former Bolivian President, was caught plotting and 
was deported by President Paz Estenssoro. He's arrived back in Montevideo and 
we're supposed to report any signs that he may be returning to Bolivia. Paz 
Estenssoro is in serious trouble right now, and the La Paz station wants to head 
off any complications from Siles. Holman continues to meet with Jose Arce, the 
Bolivian Ambassador, to pass tidbits from police intelligence. Yesterday Arce 
gave a press conference to assure everyone that the rebellion now underway 
against Paz Estenssoro is communist-inspired and doomed to failure. He 
emphasized that Paz has the full support of the Bolivian people and that current 
problems have been blown all out of proportion — adding that the minority groups 
opposing Paz are so few in number that they could all be driven off together in a 
single bus. So far ex- President Siles hasn't moved from Montevideo but Otero 
has posted a special 'security' guard for Siles in order to watch him more closely. 



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Montevideo 6 November 1964 

In Bolivia President Paz has been overthrown by the military and allowed to 
go to Lima in exile. Ambassador Arce has resigned and has announced that he 
plans to continue living in Montevideo for a while. Meanwhile ex-President Siles 
has started to pack and will be leaving for Bolivia within a few days. Holman's 
not very happy, though, because rumours are strong that Paz Estenssoro is 
coming to live in Montevideo — meaning exile-watching will continue, only with 
new targets. 

Late tonight the Budget was finally passed by the Chamber of Deputies, ten 
minutes before the final constitutional deadline and after forty hours of 
continuous debate. Passage was made possible by a last-minute political pact 
between the Blancos, who lack a majority in the Chamber, and the Ruralistas, 
Christian Democrats and a splinter faction of the Colorados. Opinion is 
unanimous, .even among Blancos, that the Budget is unworkable because of its 
enormous deficit and that not even the devaluation of the peso included in the 
Budget exercise — the third devaluation since the Blancos took over in 1959 — 
will allow for printing enough new money to cover the deficit. 

I've seen my Soviet friends at several recent diplomatic receptions and have 
become acquainted with a couple of Romanians and Czechs as well. 
Headquarters has reacted favourably and asked that I develop the relationship 
further with the Soviet Consul, Borisov. Tomorrow night I go to the Soviet 
Embassy as the Ambassador's representative for their celebration of the October 
Revolution. Phipps tells me to expect plenty of vodka, caviar and singing. 

Montevideo 28 November 1964 

Relations between Uruguay and Brazil are heating up again although 
Goulart's importance is diminishing fast because he has heart trouble and recently 
underwent an operation. Brizola is the centre of controversy now because of 
recent declarations against the Brazilian government that were published both 
here and in Brazil. Manuel Pio Correa, J the Brazilian Ambassador, has filed 
another official protest against Brizola's conduct. Perhaps more important are the 
recent arrivals of two former high officials in Goulart's government, Max de 
Costa Santos, formerly a Deputy, and Almino Alfonso, former Minister of Labor. 
Both are far-left and Pio has protested against their arrival here, claiming they 



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entered Uruguay illegally and cannot obtain asylum because they had already 
been granted asylum in other countries following the military coup. The Minister 
of the Interior, Adolfo Tejera, J is studying the case and Holman is urging him to 
throw them out. 

In Brazil, the federal government has been forced to take over the state of 
Goias, throwing out the state government because of what is being described as 
communist subversion there. Yesterday the Brazilian Foreign Minister blamed 
the intervention in Goias (the military government's worst crisis yet) on the 
activities of exiles in Montevideo. Today President Castelo Branco told the 
Brazilian Congress that he had ordered the takeover in Goias in order to forestall 
a plot led by Brizola from Montevideo. New protests from Pio Correa are certain. 

Outright military intervention in Uruguay by Brazil is getting closer. We've 
had several alarming reports lately through the communications intelligence 
channel based on monitoring of the military traffic in southern Brazil. According 
to these reports the Brazilian Army is ready at any time to implement a plan to 
invade Uruguay and take over Montevideo in a matter of hours. 

Montevideo 2 December 1964 

I have been trying in recent weeks to follow up some of the mass of leads on 
probable agents and operations of the Cubans. Most of these leads have come 
from telephone tapping, surveillance, letter intercepts and monitoring of 
communications channels. Several of these cases have interesting aspects. 

I continue to receive the mail addressed to the Cuban intelligence support 
agent, Jorge Castillo, through the postman AVBUSY-1. In May the Cubans 
changed the cryptographic system of their network in Latin America (the 
ZRKNICK agents), probably as a result of the near-recruitment of Hernandez 
here and of the defection of the Cuban intelligence officer, AMMUG-1, J in 
Canada. Since then the National Security Agency has been unable to decrypt the 
messages which continue, nevertheless, to be sent to agents operating in several 
parts of Latin America. Although I haven't intercepted any mail that would 
appear to be sent by the Cuban agent believed to be working in Lima or La Paz, I 
have received some very suspicious letters mailed from a provincial Uruguayan 
town. 

Telephone tapping and suveillance of Sara Youchak, a frequent overt contact 
of one of the Cuban intelligence officers before the break in relations, revealed 



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that she travels frequently to Buenos Aires, where she sees her cousin, whom the 
Buenos Aires station has connected with guerrilla activities in northern Argentina 
and with communist student organizing. Moreover, Sara has a first cousin (whom 
she has never seen) who is a State Department Foreign Service officer. Soon I'll 
ask headquarters to check with State Department security people to see if we 
might use the cousin to place an agent next to Sara. 

Through monitoring of airline reservation communications the National 
Security Agency has discovered that the manager of the Montevideo office of the 
Scandinavian Airlines System, Danilo Trelles, is in charge of assigning pre-paid 
tickets for passengers from many Latin American countries on the SAS flights 
that start several times each week in Santiago, Chile, and arrive after a number of 
stops in Prague. The pre-paid tickets are usually requested by the Prague office of 
Cuban a Airlines and are intended for Latin Americans travelling to Cuba. 
Because the pre-paid tickets are sent as 'no-name', Trelles can assign them and 
assure that the identity of the traveller is protected. What we are trying to 
discover is how Trelles is advised of the identities of the travellers. The answer 
may be through the Czech or Soviet embassies which Trelles's assistant, Flora 
Papo, often visits. Papo in fact takes care of the details of this travel-support 
operation and the A VENIN surveillance team has turned up interesting 
vulnerability data on her. 

AVENGEFUL telephone tapping on the Montevideo office of Prensa Latina, 
the Cuban wire service, seems to reveal what I suspected — that PL is serving as a 
support mechanism for Cuban intelligence operations now that the Embassy is 
gone. The monthly subsidy for the office is about five thousand dollars, which is 
wired to the Montevideo branch of the Bank of London and Montreal from the 
Bank of Canada. The tap also revealed that the total of all the salaries, rent, 
services of Press Wireless and other expenses amount to only about half the 
subsidy. Headquarters is currently processing clearance for an Assistant Manager 
of the Bank of London and Montreal whom I already know rather well and whom 
I'll recruit for access to cheques on the PL account. It would be interesting to 
discover the recipients of the unaccounted half of the subsidy, but right now I can 
still only suspect that it is used for intelligence operations. 

We have a new case officer for operations against the Communist Party of 
Uruguay and related organizations. He's Bob Riefe } who was the chief instructor 
in communism for the headquarters' portion of the JOT course five years' ago. 
Riefe has a Ph.D. and has spent his entire career in training, but he was able to 



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wangle an assignment in the DDP as part of the Office of Training's 'cross- 
fertilization' programme. A couple of years ago he was to have been assigned to a 
WH station but a heart-attack delayed him. Hopefully I can convince Riefe to 
take back the former Cuban Embassy chauffeur, AVBARON- 1 , whom I've been 
unsuccessfully trying to push back into PCU work since the Cubans left. 

Riefe's predecessor, Paul Burns, is returning to headquarters rather 
discouraged after four years here without getting a really high-level penetration 
of the PCU. In recent months he has spent most of his time struggling with the 
AVPEARL audio penetration of the PCU conference room. The bugged porcelain 
electrical sockets arrived from headquarters some months ago but when 
AYCAVE- 1 , the PCU penetration agent assigned to make the installation, got his 
next guard duty he found that the paint flecks were not quite exact. Back in the 
station the paint was corrected by Frank Sherno, J a TSD technician who is 
setting up a regional support shop in the Buenos Aires station to service Uruguay 
and Chile as well as Argentina. (This new shop will give us much faster service 
than the Panama station regional support base for technical operations.) 

At last a listening post has also been found — it's a tiny apartment in a 
building behind the PCU headquarters but located where the carrier- current 
transmitters in the sockets can be picked up. Then AVCAVE-1 got guard duty 
again, Sherno came over from Buenos Aires again, and during the course of 
guard duty the agent was able to replace the original sockets with our bugged 
ones for testing. Sherno in the LP had transmitters to test the switches (one 
frequency to turn them on and another frequency to turn them off) and a receiver 
to test the RF and audio quality. Then AVCAvV-1 removed our sockets and 
replaced the original ones since there was no way to. get a message from Sherno 
back to him if they hadn't worked properly. 

The testing operation was very risky, both for AVCAVE- 1 and for Sherno in 
the LP. Guard duty at PCU headquarters is always in pairs and for AVCAVE-1 to 
slip loose from his colleague and install the bugged sockets was difficult even 
though it only involved the use of a screwdriver. Getting Sherno in and out of the 
LP with the transmitters and receivers was also dangerous because almost all the 
people around the PCU headquarters are party members and suspicious of 
strangers. Somehow both AVCAVE-1 and Sherno came out undiscovered, and 
now Riefe will proceed with finding a permanent LP-keeper and with the final 
installation by AVCAVE- 1 . According to Sherno the signal is excellent. 



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Montevideo 4 December 1964 

Pio Correa, J the Brazilian Ambassador, is making a loud noise over the two 
former Goulart government leaders, Max da Costa Santos and Almino Alfonso. 
Adolfo Tejera, the Minister of the Interior, recommended to the NCG ten days 
ago that they be expelled because they had indeed entered Uruguay illegally. A 
week later the Foreign Minister announced that they can remain in Uruguay 
because their documentation is, after all, in order — according to a Ministry of the 
Interior investigation. Furious, Pio Correa has filed another protest note asking 
for their expulsion and Brizola's internment — complaining also that Brizola has 
several light aircraft at his disposal for courier flights to and from Brazil. 

The NCG has passed this latest protest back to the Ministers of the Interior 
and Foreign Relations with an instruction to the latter that the Brazilian 
government be asked for an explanation of the recent repeated violations of the 
border by Brazilian military vehicles. Three aircraft belonging to Brizola were 
also grounded. Commissioner Otero's } Intelligence and Liaison Department of 
the Montevideo Police, however, have arrested one of Colonel Camara Sena's J 
spies — a Navy sergeant who came posing as a student but was caught surveilling 
one of the exiles. He was charged with spying but set free when the Brazilian 
Embassy intervened. 

According to Holman, Pio Correa is going to keep protesting until Brizola 
either leaves Uruguay or is interned and until a favourable resolution of the 
Alfonso and Santos cases. Otherwise we can expect Brazilian military 
intervention. 

Montevideo 18 December 1964 

A new victory for the station at Georgetown, British Guiana, in its efforts to 
throw out the leftist-nationalist Prime Minister and professed Marxist, Cheddi 
Jagan. In elections a few days ago lagan's Indian-based party lost parliamentary 
control to a coalition of the black-based party and a splinter group. The new 
Prime Minister, Forbes Burnham, is considered to be a moderate and his 
ascension to power finally removes the fear that lagan would turn British Guiana 
into another Cuba. The victory is largely due to CIA operations over the past five 
years to strengthen the anti- Jagan trade unions, principally through the Public 
Service International J which provided the cover for financing public employees 



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strikes, lagan is protesting fraud — earlier this year he expelled Gene Meakins, J 
one of our main labour agents in the operation, but it was no use. 

Montevideo 25 December 1964 

Christmas in Uruguay is like the 4th of July at home. It's hot and everybody 
goes to the beach — and it's almost completely secular with the official 
designation 'Family Day'. (Holy Week is similarly changed to 'Tourism Week' and 
most of the country goes goes on vacation.) How different from Ecuador where 
the Church is so powerful. 

I stopped over at O'Grady's house this morning for a little Christmas cheer 
but ended up commiserating with him over the latest Holman outburst. A few 
days ago O'Grady and his wife gave a little cocktail party and buffet as a 
welcome for the new cp operations officer, Bob Riefe. Holman didn't hold his 
drinks very well that night and soon began to lash out at O'Grady and then at 
Riefe and Riefe's wife. It was all pretty unpleasant and now O'Grady's hives are 
back out in full bloom, in spite of the fact that we all know now that Holman is 
coming out the real loser. 

Apparently certain powers in headquarters are not entirely pleased with the 
station's performance, particularly in the area of Soviet operations, and Holman is 
to be transferred in about six months to Guatemala. His replacement as Chief of 
Station will be a man named John Horton, J who came to WH Division from the 
Far East Division along with so many others after the Bay of Pigs invasion. 
Holman has-only just got official notification but he heard the change was 
coming, some time ago from his protector Ray Herbert, the Deputy Division 
Chief. Although Herbert was able to salvage the situation somewhat by arranging 
Holman's reassignment to Guatemala, Holman's bitterness keeps growing. Russ 
Phipps, the Soviet operation officer, is now almost up to O'Grady's level on 
Holman's list of persons to blame, but Riefe was attacked because he's obviously 
part of the new crew being assembled by Horton. Clearly Holman resents being 
edged aside by newcomers from FE Division because his days in Latin America 
go back to World War II. 

What O'Grady and Phipps, and Alexander Zeffer too, are worried about is 
that Holman's search for scapegoats will seriously damage their careers and 
chances for future promotions and assignments. A couple of months ago I 
chanced across the combination to Holman's safe-cabinet and out of curiosity 



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began to read some of the 'Secret-Informal Eyes Only' letters that he exchanges 
more or less weekly with Des FitzGerald, J the Division Chief. I was so shocked 
at the knives he was putting into everyone but me that I gave the combination to 
O'Grady Now he's reading the letters — which only makes his hives worse — and I 
think he's passed the combination on to Zeffer and Phipps. The dangerous part is 
that Holman is not so damning in the official fitness reports on the other officers, 
but that he cuts them so badly in these letters that they aren't supposed to see. 
Reading these letters, in fact, is highly dangerous, but all these officers are 
competent and certainly harder workers than Holman. I wonder if we can hold 
together for these next six months without rebellion. 

Montevideo 15 January 1965 

Some decisions on Brazilian affairs indicate the Blancos are persisting in 
efforts to elude Brazilian pressures. The NCG voted not to give political asylum 
to Almino Alfonso and Max da Costa Santos on the grounds that they had come 
to Uruguay after having received asylum in other countries. However, they were 
given ninety-day tourist visas which isn't going to please Pio Correa. No decision 
on Brizola was needed because he promised the Minister of the Interior that he'll 
be leaving Uruguay no later than 23 January. On the other hand Brizola will be 
allowed to return to Uruguay in which case he can request political asylum again. 

Two important new exiles are now here. One, a former Brazilian Air Force 
officer and one of its most highly decorated men, escaped from a military prison 
in Porto Alegre and made it across the border. The other is a former deputy who 
was in exile in Bolivia until ex-President Paz was overthrown, but came here 
recently for fear the new rightist regime in Bolivia would expel him to Brazil. 
Both are important supporters of Brizola. 

In a personal complaint to the NCG President, Pio Correa tried to get action 
started on the fourteen recent requests he has made regarding the exiles. This 
prompted several notes from the Uruguayan Foreign Ministry but resistance 
continues. The Brazilian press, meanwhile, probably at the government's 
instigation, has started a campaign to raise the tension by speculating that 
relations are about to be broken and that commercial pressures are being exerted 
on Uruguay. For their part the Uruguayan and Brazilian Foreign Ministers have 
denied that relations are about to be broken, while in the NCG a Colorado 



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Councillor called for the Foreign Minister's resignation for his inept handling of 
Brazilian problems. 

These Brazilian affairs are a nuisance for me because I have constantly to be 
checking rumours and requesting special reports from the police on the exiles for 
Holman or O'Grady to use with Pio Correa, Fontoura and Camara Sena. Who 
could believe a handful of exiles here could be a threat to the Brazilian military 
government? Even so, headquarters keeps insisting that we help the Rio station in 
their operations to support the military. 

If the military in Brazil weren't so strongly anti-communist our support for 
them would be embarrassing. In recent weeks the Brazilians have had an internal 
crisis going over the question of whether the Navy or the Air Force is to operate 
the aircraft of their only aircraft-carrier — a decrepit cow discarded by the British. 
Two ministers of the Air Force have recently resigned over decisions by the 
President to have the Navy fly the airplanes, but he changed his mind again and 
yesterday the Minister of the Navy resigned. Now, it seems, the Brazilian carrier 
strike force will have Air Force pilots. 

To make matters with Brazil worse, a few days ago the commercial offices of 
the Brazilian Embassy were bombed, although little damage was done because 
the bomb was poorly placed. However, written on a wall nearby was the name 
'Tupamaros' which appeared at several other recent bombings. Commissioner 
Otero, Chief of Police Intelligence, is trying to find out who these people are. He 
thinks they may be the Sendic group. Raul Sendic, the revolutionary socialist 
leader, who had been arrested on a contraband charge in an Argentine town near 
the border, was recently released, and may have returned to Montevideo. 

Inability to curb these bombings illustrates the difference between good 
penetrations of the CP and related groups and bad ones. In Ecuador a group like 
this would have been wiped up by now. Nevertheless, Riefe doesn't take the 
bombings very seriously and seems intent on concentrating on the strictly- 
reformist PCU. 



Montevideo 4 February 1965 



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At Headquarter' s instruction I'm continuing to develop the relationship with 
Sergey Borisov, the Soviet Consul and KGB officer. 

Last Sunday Janet and I went with Borisov and his wife Nina to the beach. 
First they came out to our house in Carrasco and then Borisov drove us out to a 
beach near Solymar. His driving is very odd and made me nervous — practically 
like a beginner. Not so his chess, of course, where he beat me easily. Phipps tells 
me that Borisov knows I'm a CIA officer without any doubt, so I wonder 
sometimes why I bother meeting him. Headquarters says that's just the reason to 
keep the relationship going — on the chance that Borisov could be disaffected and 
trying to 'build a bridge.' 

Holman has asked me to take over complete responsibility for the satellite 
missions, which include Czechs, Romanians, Bulgarians, Poles and Yugoslavs. 
For East European countries we have no elaborate operational procedure such as 
we do for the Soviets. Headquarters apparently has such high-level penetrations 
in those countries that the painstaking work of spotting and placing access agents 
next to them simply isn't justified. Successes in the case of the satellites have 
come from CIA officers in direct contact with them. As a start, however, I'm 
going to bring the files up to date on the personnel of each mission and next week 
I'll try to get the Foreign Ministry protocol files through AVDANDY- 1 for that 
purpose. Then I'll start a photographic album and get reports from headquarters 
on the new arrivals. Right now I'm not even sure who they all are, because 
Phipps has been concentrating on the Soviets and ignoring the Eastern 
Europeans. 

Last week I made my first visit to the AVENGEFUL telephone-tapping LP at 
the Montevideo Police Headquarters. I took along a visiting TSD technician who 
wanted to see how the equipment is being maintained — in the operational files I 
couldn't find the last time it was visited by a station officer, probably some years 
ago. The room is located right over the office of the Deputy Police Chief on the 
same floor as Commissioner Otero's Intelligence and Liaison Department. 
However, there is a locked steel door between I and E and the LP — in fact the 
normal way to enter the LP section of the floor is by an elevator from the 
underground garage for which a special key is necessary. Off the same hallway as 
the LP are several rooms that I was told are used by the Chief and Deputy Chief 
as rest quarters. 

DeoAnda J and Torres, } the technicians and LP operators, do an excellent 
job in keeping up the equipment but they have an uncomfortable situation with 



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the heat. Those tube-operated Revere recorders give off so much heat that the 
room is stifling in the summer. I promised to get them an air-conditioner that 
they'll install either in a small high window to the inside hallway, or else they'll 
have to make another opening. The LP has no windows to the street and only the 
one small window to the hallway — good security but no ventilation. 

Montevideo 7 February 1965 

Investigation of Prensa Latina (the Cuban wire service) has got more 
interesting. Because of procedural agreements I had to postpone recruitment of 
my friend at the Bank of London and Montreal until the, intelligence chief of his 
country's service spoke to him and to his superior, the bank manager — whom I 
also know from the Cerro Golf Club. This cumbersome process completed, I 
started reviewing the Prensa Latina account. As cheques are not returned to the 
account holder in Uruguay, it was easy to discover that practically all the money 
is paid out in cash. Legitimate expenses still total only about half of the monthly 
subsidy, so the rest of the money is clearly going into 'other activities'. The next 
step is to check the financial reports filed with government offices to see if we 
have a case for shutting down Prensa Latina for falsifying financial reports or 
similar irregular procedures inconsistent with the subsidy. 

Montevideo 11 February 1965 

At last the NCG voted to intern Brizola — an accomplishment that has taken 
every ounce of Pio Correa's J considerable energy and persistence. Typically, 
however, the NCG decided to let Brizola pick the town where he wants to live — 
any except Montevideo and no closer than 300 kilometres to the Brazilian border. 
Now we can begin to relax about these messy Brazilian operations. 

Pio Correa has done an excellent job bringing the Uruguayans into line over 
the exiles, which made possible the Foreign Minister's pleasant visit. Brizola, 
incidentally, has chosen the beach resort of Atlantida as the town where he'll be 
interned. Otero will continue the logs by 'security guards' from police intelligence 
— it's only 35 kilometres from Montevideo where Brizola could still be fairly 
active — and right at the limit on proximity to Brazil: 301 kilometres. 

Final approval for the AID Public Safety Mission was obtained by Holman 
from Tejera, the Minister of the Interior, and last month the first Chief of Public 



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Safety arrived. For the time being we will refrain from putting one of our officers 
under Public Safety cover, and I'll continue to handle the police intelligence 
operation. After the Mission gets established through straight police assistance 
(vehicles, arms, communications equipment, training) we'll bring down an officer 
to work full-time with Otero's intelligence department. About the best I can do 
part-time is to keep AVENGEFUL going and increase Otero's subsidy for 
intelligence expenses. 

These Montevideo police are getting the Public Safety assistance none too 
soon. In another bank robbery just three days ago the policeman on guard got 
excited and fatally shot one of the customers — mistaking the customer for one of 
the robbers. Seeing this, the robbers, a man and a woman, rushed out of the bank 
leaving the money behind. They walked for several blocks and hailed a taxi 
which took them to the other side of the city. Since they had no money to pay the 
fare, the robber gave his pistol to the taxi driver in payment. The driver, however, 
heard of the robbery on the radio and turned the pistol over to the police. On 
checking the weapon the police discovered that it was the service revolver of one 
of their own policemen. He was arrested at home and admitted forcing his wife to 
go along with him on the robbery. The last time that particular bank had been 
robbed was in 1963 by two women (or men?) dressed as nuns who were never 
caught. 

New strikes: Montevideo buses and trolleys for payment of subsidies and 
salaries; port workers for last year's Christmas bonus; city employees for 
retroactive fringe benefits. Inflation during 1 964 was almost 45 per cent and last 
month reached the 3 per cent per month rate. The Blancos are trying to put 
through another devaluation, while the peso is unsteady and has now slipped to 
30. 

Montevideo 25 February 1965 

I got an important hit on the postal intercept operation against Jorge Castillo, 
the Cuban intelligence support agent used as an accommodation address for 
Agent 101 in Lima or La Paz. The letter-carrier, AVBUSY-1, offered me a large 
brown manila envelope the other day but it was addressed not to Castillo but to 
Raul Trajtenberg who lives in the same huge apartment building as Castillo. I 
took the envelope because it was sent from Havana and the words Edificio 



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Panamericano in the address were underlined just as they were to have been 
underlined in correspondence to Castillo. 

I arranged with AVBUSY-1 to keep the envelope for several days in case 
headquarters wanted to send down a secret-writing technician to test the contents. 
Inside were Cuban press releases and clippings from Havana newspapers. 
Headquarters answered my cable by sending a technician immediately from 
Panama (the Buenos Aires regional support technician is a specialist in audio and 
photo rather than SW techniques) and he was going to try to 'lift' secret writing 
from the contents. However, we couldn't find a letter press fast enough so I had to 
return the envelope to AVBUSY-1 without the test. 

On checking station files on Trajtenberg I found a letter that he had written 
from Havana two years ago that was intercepted through the AVIDITY operation. 
Strangely, the handwriting on the manila envelope was exactly the same as that 
of the Trajtenberg letter written from Havana — meaning, probably, that 
Trajtenberg addressed the envelope to himself and, along with other self- 
addressed envelopes, gave it to a Cuban intelligence officer for later use. 
Trajtenberg's mail will also be given to me regularly by AVBUSY-1 although 
Trajtenberg is leaving soon to study at the University of Paris. So far other 
Trajtenberg intercepts reveal that his father (he lives with his parents) is 
manipulating large sums of money in a numbered Swiss bank account. The Berne 
station advised that the Swiss security service will provide data from numbered 
accounts but insist on all the details and reasons — which headquarters doesn't 
want to give right now because of the sensitivity of other cases in this same 
Cuban network. 

Montevideo 18 March 1965 

Washington Beltran, the new NCG President, has had plenty of labour unrest 
in spite of the recent carnival distractions: railway workers striking for the 1964 
retroactive pay increases, the interprovincial buses stopped again for back 
salaries and subsidies, the Montevideo bus and trolley employees also striking for 
salaries and subsidies, and public-health clinics and hospitals struck by 
employees demanding their January salaries. Today there is no public 
transportation in Montevideo except taxis, and the Sub- Secretary of the Treasury 
just announced that government receipts amount to only half the daily cost of the 
central administration. 



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We've been trying to find a little relief from the gloomy atmosphere of 
dissention in the station. Holman's letters to Fitz- Gerald are getting even worse 
if that's possible and each time O'Grady reads the file his hives start up again. 
Bob Riefe, the CP officer, has a way of reading the news of each day's 
mismanagement by the Uruguayan government with loud rhetorical questioning 
broken by equally loud and contemptuous guffaws and cackles. His approval of 
the strikes and other agitation by his target group are shared by all of us, though 
perhaps for different reasons, as we watch political partisanship prevail over the 
reforms (land, fiscal) and austerity needed to stop the country's slide. Russ 
Phipps, who sits on the other side of me from Riefe, pores over his surveillance 
reports, telephone transcripts and observation post logs, muttering from time to 
time that's it not the PCU but the Soviets who deserve the honour of putting this 
country straight. 

**# 

Riefe and Phipps always catch me in the middle because I'm supposed to be 
building up the police intelligence department and developing political contacts. 
When things get bad I usually call over beyond Riefe to Alex Zeffer but his 
morale is so low he can rarely summon more than an agonizing oath. Then I have 
to call on O'Grady for support because he works with military intelligence, such 
as it is, and is the most terrorized of all by Holman. The five of us then discuss 
solutions. Usually Holman is selected to save Uruguay — one plan is to send 
Phipps over to the KGB Chief to request that they defect Holman, with our help 
if they want it, but if they turn him down, as is likely, well, there's always 
AVALANCHE. 

Officers from the Inspector-General's staff were just here on a routine 
inspection. This was the time to get the word back to headquarters about 
Holman's incompetence, but I don't think anyone opened his mouth. 

Montevideo 31 March 1965 

The AVPEARL audio penetration of the PCU headquarters conference room 
is another step closer. AVCAVE- 1 , again on guard duty, permanently installed the 
two electrical sockets and final tests by Frank Sherno in the LP were successful. 
Now the problem is to find a good LP-keeper who can monitor the installation 



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and record the meetings. Ideally this person could also transcribe, but chances are 
that transcribing will have to be done at first by AVENGEFUL-5, J transcriber of 
the PCU telephone tap, who already knows the names and voices. 

Montevideo 6 April 1965 

The general strike today is very effective: Otero's office estimates that 90 per 
cent of organized labour is participating. No government offices are open, there 
are no taxis or buses, no restaurants, no newspapers. The theme is protest against 
government economic policies and marches have been loud and impressive 
although no violence is reported. Speakers have called for radical solutions to the 
country's problems — solutions that will attack the privileged classes, where the 
problems begin. 

The strike is also being used to promote coming CNT programmes, including 
the preparatory meeting for the Congress of the People that was postponed from 
last December and the annual protest march of the sugar-cane workers from 
Artigas in the far north to Montevideo. Recent statistics support the protests: the 
OAS reported this month that inflation in Uruguay during 1962-4 was 59.7 per 
cent — higher than Chile (36.6), Argentina (24.4) and even Brazil (58.4). 

The government is getting uneasy about the CNT's successes of late. Adolfo 
Tejera, the Minister of the Interior, made a radio speech last night on the rights 
and duties of citizens in the context of today's general strike. 

Holman keeps insisting that I develop more political contacts but I'm keeping 
the activity to a minimum. Even if we reached a level of effectiveness in political 
action similar to what we had in Ecuador, we would simply have better weapons 
to use against the PCU, CNT and others of the extreme left. What's needed here 
is intensification of land use, both for increasing export production and creating 
more jobs, but this can never happen without land reform. If we were to have a 
political-action programme to promote land reform, as well as action against the 
extreme left, some justification might be found in the balance. But these 
Uruguayan politicians are interested in other things than land reform. 



Montevideo 14 April 1965 



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The government has taken a first step towards suppressing agitation 
organized by the extreme left. Last week the NCG designated an emergency 
commission with special executive powers to deal with the drought, now some 
months old, which is seriously endangering livestock. The commission includes 
the Ministers of Defense and Interior and similar commissions have been 
established in each department under the local police chief with representatives 
of the Ministry of Defense, a regional agronomist and a veterinarian. The same 
day the NCG also decreed special powers for the Minister of the Interior to limit 
public gatherings to twenty-four hours. This second decree, which the Minister 
later admitted, is to be used against the march of the sugar-cane workers, was 
enacted in a manner designed to confuse it with the special drought measures and 
with the hope that it might pass without much comment. 

The CNT immediately denounced the measure as directed against the sugar- 
workers' march, which prompted the Minister's admission; and the Colorado 
minority NCG Councillors unsuccessfully tried to rescind it. Because these 
decrees allow for restriction of civil liberties they were presented to the 
Legislature for approval. The Blancos, however, knowing that the Colorados and 
others would rescind the decree aimed at the marchers, have prevented a quorum 
from being constituted each day by simply staying away. 

In passing the decrees the NCG clarified that they were not adopting 
emergency security measures as defined in the Constitution (equivalent to a state 
of siege) and Tejera has given assurances that his special powers will be used 
with reason. However, in a public statement two days ago he accused the 
marchers of taking along women and children as hostages, of not having proper 
health and educational facilities for children, and of allowing promiscuity 
dangerous to collective morals. Clearly we have a confrontation building up, 
aided by press reports coming from the Ministry of the Interior that the march 
will be broken up before it reaches Montevideo. Right now the marchers are in 
San Jose, only a few days away, where police are registering them by taking 
biographical data, fingerprints and photographs for Otero's intelligence files. If 
Tejera gives orders for the march to be broken up not too many people will notice 
because this is tourism week and most of the country is on vacation. From our 
viewpoint he ought to do just that because the sugar-cane workers are led by Raul 
Sendic, now a fugitive and believed to be the organizer of most of the terrorist 
bombings in the past year. 



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Montevideo 25 April 1965 

The march of the sugar-cane workers arrived in Montevideo yesterday — 
almost unnoticed and with no danger of intervention by the government. 
Something much bigger has suddenly attracted everyone's attention: one of 
Uruguay's major banks has failed and been taken over by the Bank of the 
Republic. The sensation is causing mild panic and fear that other banks may go 
under, which might not be a bad thing. In this small country there are about fifty 
private banks even though the government banks do about 65 per cent of 
commercial business. The peso has slipped to 39. 

Montevideo 27 April 1965 

Inspector Piriz was assigned to handle investigations into fraud and other 
crimes related to the bank failure. So far eleven of the officers and directors have 
been jailed. Today, however, two more private banks were taken over by the 
Bank of the Republic, and for fear of a run on banks in general a holiday was 
decreed for all private banks. The holiday doesn't make much difference, though, 
because all the private banks have been closed since the first failure six days ago, 
when the unions struck to demand job security for employees of the bank that 
failed. Almost unnoticed today was the NCG'S lifting of the emergency drought 
decree of 8 April although the special decree on limiting public gatherings was 
retained. 

Montevideo 28 April 1965 

I don't quite understand this invasion of the Dominican Republic. Bosch was 
elected in 1 962 thanks to the peasant vote organized by Sacha Volman. J Volman 
earlier set up the Institute of Political Education J in Costa Rica (cryptonym 
ZREAGER) where we sent young liberal political hopefuls for training. Bosch is 
from the same cut as Munoz Marin, Betancourt and Haya de la Torre. He stands 
for the reforms that will allow for redistribution of income and integration. 
Rightist opposition to his land reform and nationalistic economic policies brought 
on his overthrow by the military in 1963 after only seven months in power. This 



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was another chance for him to turn the balance towards marginalized peasants 
and to channel income from industry, mostly sugar, into education and social 
projects. 

Now, just as the Constitutionalists have the upper hand to restore Bosch to 
power, we send in the Marines to keep him out. Nobody's going to believe 
Johnson's story of another Cuba-style revolution in the making. There has to be 
more to the problem than this — for some reason people in Washington just don't 
want Bosch back in. Uruguayans don't understand either. People here think 
Bosch stands for the kind of liberal reform that brought social integration to 
Uruguay. Already the street demonstrations against the US have started. Very 
depressing. AVBUZZ-1 is going to look silly trying to place propaganda — 
headquarters says we must justify the invasion because of a danger to American 
and other foreigners' lives and a takeover of the Constitutionalist movement by 
communists. 

Montevideo 4 May 1965 

Headquarters has sent about fifty operations officers to the Dominican 
Republic to set up outposts in rural areas for reporting on popular support for the 
Caamano forces. The officers were sent with communications assistants and 
equipment for radioing reports straight back to the US. All WH stations were 
notified to put certain officers on stand-by for immediate travel, but Holman is 
not going to let me go — probably because he would have to work a little harder. I 
would like to go and see for myself. Surely the Constitutionalist movement hadn't 
fallen into the hands of the communists. And this Johnson Doctrine! 'Revolutions 
that seek to create a communist government cease to be an internal matter and 
require hemisphere action.' Bullshit. They just don't want Bosch back in and the 
'they' is probably US sugar interests. 

We've had more protest demonstrations against the invasion, some violent. 
Targets of the attacks: US Embassy, OAS, US businesses. Today four 
demonstrators were wounded by gunfire when police broke up a street march 
following a meeting at the University. The private banks are still closed — fifteen 
days now — and there's no telling when government employees' salaries for April 
will begin being paid. Today both the Minister of Defense and the Minister of the 
Interior publicly denied the rumours of an impending coup. 



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Montevideo 7 May 1965 

Ambassador Harriman came to explain the Dominican invasion and to 
propose Uruguayan participation in the multilateral peacekeeping force He spoke 
to President Beltran yesterday and afterwards held a press conference in which he 
blamed those fifty-eight trained communists for having taken over the Bosch 
movement, thereby creating the need for intervention. He admitted, though, that 
Caamano, the leader of the Bosch movement, isn't one of the fifty-eight. Then he 
said the US government is not going to permit the establishment of another 
communist government in the hemisphere. 

I can easily imagine the station in Santo Domingo in a panic compiling that 
list of fifty-eight trained communists from their Subversive Control Watch List. 
There were probably more than fifty-eight, but Caamano and the Bosch people 
were in control, not trained communists. The movement was put down not 
because it was communist but because it was nationalist. The Uruguayans weren't 
convinced by Harriman — after he left, the NCG voted not to participate in the 
peacekeeping force approved yesterday by the OAS. 'Fifty-eight trained 
communists' is our new station password and the answer is 'Ten thousand 
marines'. 

Montevideo 12 May 1965 

Protest', demonstrations and attacks against US businesses over the 
Dominican invasion continue. The CNT, FEUU and other communist-influenced 
organizations are most active in the demonstrations, but opposition to the 
invasion is a popular issue going all the way up to the NCG. All America Cables 
and IBM are among the businesses bombed. 

The CNT is also leading protests against economic policies, and new 
revelations of corruption in the banking sector are coming up almost daily. 
Although the Congress passed a special law assuring jobs for the employees of 
banks that have failed, tension continues, with three more banks taken over by 
the Bank of the Republic yesterday. The bank workers' union voted to return to 
work but today the government announced that the banks won't open until 17 
May. The reason is that they can't open until a shipment of 500 million new pesos 
arrives from London. 



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Coup rumours continue and yesterday Tejera told the NCG that he believes 
the 8 April decree limiting public gatherings is unconstitutional. He complained 
that the only law relating to public meetings dates from 1897, but he promised 
the NCG a new constitutional decree on the subject for next week. Port workers 
struck yesterday and judicial branch employees began partial work stoppages for 
payment of April salaries. 

Montevideo 20 May 1965 

Financial corruption in Uruguay seems to have no end. Yesterday the NCG 
fired the entire board of directors of the Bank of the Republic. Nineteen officers 
and directors of banks taken over have been imprisoned and investigations are 
continuing. After being closed for twenty-six days the private banks have 
reopened but the falling peso — it's down to 41 — suggests more scandal to come. 

On the labour front, strike action for payment of April salaries has been 
started by government employees in the judiciary, public schools, port, petroleum 
monopoly, fishing enterprise, postal system, communications and University. 
Other strikes are being planned or threatened. 

Coup rumours are so strong that the Ministry of Defense yesterday issued a 
denial. The latest rum ours relate to speculation in the Brazilian press that 
Brazilian and Argentine military leaders are watching the increasing strikes and 
banking scandals in Uruguay closely, and that perhaps Uruguay is becoming a 
bad risk because of its opposition to intervention in the Dominican Republic and 
its tolerance of exile activities. Meanwhile the NCG is considering Pio Correa's 
latest protest on the exiles' meetings, finances and infiltration from Uruguay back 
to Brazil. 

The PCU has in recent months been planning to host an international pro- 
Cuba conference to be called The Continental Congress of Solidarity with Cuba 
— now scheduled for 18-20 June. Headquarters is anxious to prevent the 
conference so Holman proposed to Tejera that it be prohibited because it might 
reflect badly on Uruguay in the US (where emergency loans are going to be 
sought for financial relief), and in Latin America. Tejera immediately saw the 
connection with Brazilian problems, and promised to take up the matter with the 
NCG. 

Montevideo 29 May 1965 



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Suddenly we've had a flurry of security moves sparked by controversy over 
the activities of one of O'Grady's people, Juan Carlos Quagliotti, J and others of 
his group. Last night extraordinary police control was established in Montevideo 
and the interior departments, with special patrols, check points and security 
guards at radio stations, the telephone company, waterworks, railroad stations, 
bridges and crossroads. This morning Tejera said publicly that these measures 
were taken to help the electric company promote voluntary rationing of power, 
because of low generating capacity as a result of the drought last summer. The 
Minister of Defense also denied any special reasons for the police measures, but 
rumours are stronger than ever of a military move against the government. 

According to Commissioner Otero of police intelligence, what really 
happened is that Quagliotti was arrested after Otero's investigation revealed that 
he had arranged for the printing and distribution of a distorted version of an 
article written in 1919 by President Beltran's father, on justification of military 
intervention in politics. The judge who heard the case refused to take jurisdiction, 
however, and Quagliotti was released pending action by military courts. 
Quagliotti's release caused a wave of ill-feeling in the police, while resentment 
also broke out in certain military circles against the police for having made the 
investigation and arrest. 

So far the Quagliotti case hasn't been connected with the special security 
measures and for the time being O'Grady is going to avoid meeting him. 
Similarly when Otero asked me several days ago what I knew about Quagliotti I 
said nothing. Headquarters is very concerned that a breach is opening up between 
police and military leaders, but we've reported that the storm will probably pass. 
According to the Chief of Police, Colonel Ventura Rodriguez, the crisis is being 
resolved. 

At an NCG meeting yesterday before imposition of the special security 
measures, Tejera asked for permission to ban the Continental Congress of 
Solidarity with Cuba. Using a report we had prepared on the Congress as his 
own, the Minister said the purpose of the Congress was to raise the question of 
relations with Cuba once more and to promote foreign ideologies that are 
incompatible with Uruguayan institutions. He said he wishes to avoid the 
pernicious proselytism by trained communist elements who promote infiltration 
by dangerous extremists, adding that Uruguay already has enough problems 
without this Congress. The NCG postponed a decision but chances are good that 
they'll prohibit the Congress in order to avoid jeopardizing their already difficult 



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prospects for refinancing the Bank of the Republic, which is bankrupt, owing 
some 18 million dollars to New York banks. The President of the Bank has 
resigned, and the bank has been taken over by the NCG. The peso is now down 
to 52, and the scandals are moving into wool-exporting companies. 

Montevideo 2 June 1965 

Last night the NCG discussed the Quagliotti case with speeches from Tejera 
and the Minister of Defense. Tejera admitted that the special security measures of 
last week — which are still in force — were a result of Quagliotti's agitation in 
military circles and of dissention over whether he will be prosecuted or not. 
Today Quagliotti appeared before a military court which refused to take 
jurisdiction because he hadn't actually entered any military installation. It seems 
the crisis has passed for the time being thanks to Quagliotti's friends among the 
senior military officers, but resentment continues in the police over the failure to 
prosecute in both civil and military courts. 

Tejera's request to the NCG to ban the pro-Cuban Congress went through. 
They voted to prohibit it on the principle of nonintervention. Headquarters will 
be pleased. 

Montevideo 4 June 1965 

Only a few more weeks until Holman is transferred. What none of us can 
imagine is why he is going to Guatemala, where one of the most serious 
insurgency threats exists. Surely if he is bad enough to be transferred from 
Montevideo after only two years, he's bad enough not to be sent as Chief of 
Station where armed action is under way. 

About the only success he can claim is getting the Public Safety programme 
going. After the first AID officers arrived, Holman gave a couple of dinners to 
introduce them to the Minister of the Interior and senior police officers. As the 
station officer in charge of police liaison I had to go to Holman's house for these 
dinners, and soon he'll be giving more parties to introduce the new Chief of 
Station and say farewell. Strange man this Holman. Surely he can sense his 
isolation at the station but he never mentions it. He just keeps on denigrating the 
other officers. 



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Holman has asked me to take over another operation. This one is an an effort, 
not yet off the ground, to make a technical installation against the Embassy of the 
United Arab Republic on the street behind our Embassy and 'on the floor above 
the AI D offices. Phipps had been handling this operation without enthusiasm, 
but headquarters is getting anxious because if successful it will enable an 
important UAR cryptographic circuit to be read. As part of planning they asked 
for a floor plan of the Embassy, which I got through the AVENIN electric 
company agent, and soon a Division D officer will be coming to survey the place. 
As my office is in the back of our Embassy I can almost look out into the 
windows of the UAR Embassy. 

I still can't believe the reasons for the Dominican invasion that we're trying to 
promote through AVBUZZ-1. Holman says it all goes back to the Agency's 
assassination of Trujillo. He was Chief of the Caribbean branch in headquarters 
at the time and was deeply involved in planning the assassination, which was 
done by Cuban exiles from Miami using weapons we sent through the 
diplomatic, pouch. The weapons were passed to the assassins through a US 
citizen who was an agent of the Santo Domingo station and owner of a 
supermarket. He had to be evacuated though, after the assassination, because the 
investigation brought him under suspicion. 

Why is it that the invasion seems so unjustifiable to me? It can't be that I'm 
against intervention as such, because everything I do is in one way or another 
intervention in the affairs of other countries. Partly, I suppose, it's the immense 
scale of this invasion that shocks. Ob the other hand, full-scale military invasion 
is the logical final step when all the other tools of counter-insurgency fail. The 
Santo Domingo station just didn't or couldn't keep the lid on. But what's really 
disturbing is that we've intervened on the wrong side. I just don't believe 'fifty- 
eight trained communists' can take over a movement of thousands that includes 
experienced political leaders. That's a pretext. The real reason must be opposition 
to Bosch by US business with investments in the Dominican Republic. Surely 
these investments could have produced even while the land reform and other 
programmes moved ahead. 



Montevideo 17 June 1965 



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We almost just lost one of our principal police liaison officers, Carlos Martin, 
f the Deputy Chief of the Montevideo Police. Martin is an Army colonel, as is 
the Chief, but he is also a chartered accountant and has been supervising the 
police investigations that have uncovered so much corruption since April. He 
resigned two days ago because a judge denied his request to interrogate one of 
the convicted officers of the first bank to fail about lists of payments to high 
government officials by that bank. The lists are purposely cryptic notes that 
Martin wants clarified to aid the investigation. Martin's resignation in protest 
against political suppression of the investigations provoked such a row that the N 
CG agreed to take up the matter of the lists, and today Martin withdrew his 
resignation. So far there have been thirty-one convictions. 

Montevideo 24 June 1965 

The NCG now has the lists of political bribes paid by the first bank that 
failed in April. Names include an important Blanco Senator, the Vice-President of 
the State Mortgage Bank, a Blanco leader who has just been nominated as 
Uruguay's new Ambassador to the UN, two high officers of the Ministry of the 
Treasury, the person in charge of investigating one of the banks that failed, and a 
person known only by the initials J.J.G. This last person can only be Juan Jose 
Gari, our Ruralista political contact from the Nardone days and now the President 
of the State Mortgage Bank. 

Meanwhile the Bank of the Republic debt has been determined at 358 million 
dollars, with 38 million dollars currently due. Gold from the Bank of the 
Republic, perhaps as much as half the Bank's holdings will have to be sent to the 
US as collateral for refinancing. Such an emotional and humiliating requirement 
is sure to cost the Blancos heavily. 

In an important policy decision on the labour front, the Blancos decided to 
apply sanctions against the central administration employees for a strike on 17 
June. Justification for the sanctions is that strikes by government employees are 
illegal, although until now the government had been reluctant to invoke illegality 
because of inflation and the obvious political consequences. The decision was 
answered by another strike of central administration employees — this one began 
yesterday and will end tonight. The issues again are employees' benefits, agreed 
upon last year but still unpaid, payment of salaries on, time, and now the 



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sanctions. The strike is complete, with even the .Montevideo airport and the 
government communications system closed. Other strikes continue in the 
judiciary, University and the huge Clinics Hospital. The peso is down to 69 and 
one of the Colorado Councillors has called for the resignation of the Minister of 
the Treasury. 

Montevideo 7 July 1965 

The Movement of the Revolutionary Left (MIR) in Peru has finally gone into 
action and seems to have had several initial successes against Peruvian police. 
Three days ago the Peruvian government declared a state of siege and the 
military services have been called in to supplement police operations. Hundreds 
of leftists are being arrested all over the country but the guerrilla operation seems 
to be located mostly in the eastern slopes of the Andes towards the Brazilian 
border. Undoubtedly the Lima station's notebook of intelligence from Enrique 
Amaya Quintana, J the MIR walk-in in Guayaquil two years ago, is now in the 
hands of Peruvian military liaison officers. 

The Continental Congress for Solidarity with Cuba was shifted to Santiago, 
Chile, after we got the Uruguayans to ban it. Now the Santiago station has gotten 
the Chilean government to ban it and they'll have to try still another country. 
More likely it will be quietly forgotten. 

Montevideo 16 July 1965 

Holman is gone. No one from the station went to see him off at the airport 
except John Horton, the new Chief of Station. Already the atmosphere in the 
station has changed beyond recognition. O'Grady's hives are much better 
although he got the bad news that he is going to be transferred so that a new 
Deputy Chief with better Spanish can come. Horton speaks almost no Spanish 
and has already told me he wants me to work closely with him on the high-level 
liaison contacts like the Minister and the Chief of Police. I suppose this means 
interpreting for him until he can get along, but anything is better than Holman. 
Horton is such a contrast: very approachable, good sense of humour, very 
anglophile from his years as Chief of Station in Hong Kong. He's even running a 
car pool with his chauffeur and office vehicle, picking us all up in the morning so 
that wives can get around easier. 



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Montevideo 23 July 1965 

Financing for the new government employees' benefits was passed by the 
Senate last night after days of increasing strike activity in the postal system, 
University administration, central administration, judicial system and public- 
health system. Even the Ministry of the Treasury tax collectors were on strike. 
The financing measure calls for putting out 1.7 billion new pesos, much less than 
the request of the Blanco NCG Councillors, which prompted senators of the 
NCG President's faction to vote against the bill. This faction had wanted five 
billion in new currency — almost double what is now in circulation. Payments are 
progressing for June salaries and many of the government employees on strike 
are now going back to work. The FEUU, however, is organizing lightning street 
demonstrations as a protest against government refusal to deliver some 100 
million pesos overdue to the University. The next battle begins in a few days 
when the Chamber of Deputies starts work on the budget review, in which the 
government employees' unions will attempt to include salary increases for next 
year. Inflation during January-June this year was 26.3 per cent, which is one of 
the reasons why the government backed down on its threat to impose sanctions. 

Horton is anxious to build, up the capabilities of the police intelligence 
department — making it a kind of Special Branch for political work along the 
lines of British police practice. He wants me to spend more time training Otero, 
Chief of Intelligence and Liaison, and to give him more money for furniture, 
filing cabinets and office supplies. As soon as possible Horton wants Otero put in 
for the International Police Academy and for additional training by headquarters 
at the conclusion of the Academy course. Before leaving Washington Horton 
obtained AID approval for a CIA officer to be placed under Public Safety cover, 
and after we get approval from the Chief of Police and get the officer down here 
we will have him working full-time with Intelligence and Liaison. 

Physical surveillance and travel control are the kinds of operations that we 
plan to emphasize from the beginning. Expansion of AVENGEFUL will come 
later, perhaps, along with recruitment operations against targets of the extreme 
left, but these changes will follow Otero's training in Washington. In travel 
control we will start by trying to set up the often-delayed passport photography 
and watch-list operation at the Montevideo airport. 



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The AID Public Safety programme is moving along well. Vehicles, 
communications, riot-control equipment and training are the main points of 
emphasis. Until our Public Safety cover officer arrives, however, we plan to keep 
the police intelligence work strictly in our office. It's going to be a long and 
difficult job and I won't have time to do it adequately because of other work. 
Somehow we have to make them start thinking seriously on basic things like 
security and decent filing systems. 

Headquarters is sending down a disguise technician in order to train the 
station operations officers in its use. The technician is Joan Humphries, J the 
wife of the audio technician at the Mexico City station. Equipment will include 
wigs, hair colouring, special shoes and clothing, special glasses, moustaches, 
warts, moles and sets of false documentation. 

Montevideo 15 August 1965 

We have a new Soviet operations officer to replace Russ Phipps who has 
been transferred back to headquarters. The new officer is Dick Conolly, J a West 
Point graduate with previous duty in Cairo and Tokyo. Because Conolly can't 
handle Spanish yet, Horton asked me to help him on an operation that Phipps got 
going during his final weeks here. The operation is another chauffeur recruitment 
— this time it's AVAILABLE- 1 , J the chauffeur of the Soviet Commercial Office. 
Although the agent has Soviet citizenship, he is considered a local employee by 
the Soviet mission, because he was raised in Uruguay and is the son of Russian 
emigres. 

Phipps used one of the AVBANDY surveillance-team members for the 
recruitment. This agent, AVBANDY-4, J is the father of the team chief, an Army 
major. He had some visiting cards printed, identifying himself as Dr. Nikolich, a 
Buenos Aires import-export consultant. He approached the chauffeur as if 
interested in assistance in his efforts to promote imports to Argentina and 
Uruguay from the Soviet Union. In return for inside information on the Soviet 
Commercial Office in Montevideo Dr. Nikolich would pay the chauffeur a 
commission on all deals. Phipps's interest, however, was to use the chauffeur as 
an access agent to the Soviets working in the Commercial Office — two are 
known intelligence officers and one is suspect. 

As the recruitment was made just as Phipps was leaving, AVBANDY-4 
turned the chauffeur over to me as a Canadian business colleague working in 



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Montevideo, claiming, as Dr. Nikolich, that he would return occasionally from 
Buenos Aires and if possible would see him. Phipps also got a new safe 
apartment site, a miserable basement room in a building on Avenida Rivera a 
couple of blocks from the Montevideo zoo. The room has only a small skylight 
and is extremely cold. Nevertheless, the chauffeur and I are meeting one night 
each week. His information on the five commercial officers and their families 
plus the secretary, all of whom live in the seven-storey building housing the 
Commercial Office, is not earth-shaking but it's better than anything we've had 
until now from the other access agents. 

The Tupamaros terrorist group continues to be active, recently bombing the 
Bayer Company offices and leaving behind a protest note against US intervention 
in Vietnam. Riefe still doesn't think they're important enough to justify a 
targeting and recruitment programme, so I have begun to encourage Otero, Chief 
of Police Intelligence, to concentrate on them. There's no doubt now that this is 
the group led since 1962 by Raul Sendic, the far-left leader of sugar-cane workers 
who broke away from the Socialist Party. 

Montevideo 20 August 1965 

The CNT-sponsored Congress of the People, postponed several times since 
originally scheduled last year, has at last begun and shows signs of considerable 
success. The PCU is playing the dominant role, of course, but quite a lot of non- 
communist participation has been attracted. Practically all the significant 
organizations in fields of labour, students, government workers and pensioners 
are participating along with consumer cooperatives, neighbourhood groups, 
provincial organizations and the leftist press. Meetings continue in the University 
and at other sites where participants are drafting solutions to the country's 
problems along leftist-nationalist lines. Given the obvious failure of the 
traditional parties and Congress, this Congress of the People is attracting much 
attention and will undoubtedly provide the PCU and similar groups with new 
recruits as well as a propaganda platform. 

It is too successful to ignore so we have generated editorial comment through 
AVBUZZ-1 exposing the Congress as an example of classic communist united 
front tactics. In fact the Congress isn't the same as a united front political 
mechanism, but our fear is that it might turn into one and be used as such in next 
year's elections. Through AVBUZZ-1 we also printed a black handbill signed by 



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the Congress and calling on the Uruguayan people to launch an insurrectional 
strike with immediate occupation of their places of work. Thousands of the 
leaflets were distributed today, provoking angry denials from the Congress 
organizers. More editorial comment and articles against the Congress will follow 
in this campaign to dissuade non-communists from participating. 

One of the campaigns of the Congress of the People is for resistance to the 
stabilization programmes imposed by the International Monetary Fund, because 
these measures hurt the low-and middle-income groups harder than the rich. 
Right now a high-level group of Uruguayan political leaders is in New York 
trying to get new loans in order to refinance the bankrupt Bank of the Republic 
(Uruguay's central bank). The New York bankers, however, are insisting on new 
financial reforms that will meet IMF approval as a condition to granting the new 
loans — which may be as high as 150-200 million dollars. 

At the NCG meeting last night, as the whole country awaited news from the 
refinancing mission in New York, it was revealed that two days ago an urgent 
confidential message from the mission arrived in Montevideo in the Uruguayan 
diplomatic pouch. No one can explain why, but the pouch, which for most 
countries is the government's most closely guarded system of communications, 
wasn't retrieved at the airport. It got sent back to New York on the next flight, and 
the NCG must wait until it's found and sent again before they can make their 
decisions. 

The Blancos continue to fight among themselves over how to finance 
government employees. Yesterday the Acting Minister of the Treasury advised 
the NCG that salaries for this month simply cannot be paid without new 
resources, and he insisted on greater currency emission. Right now the deficit for 
this year is set at 6.3 billion pesos, and coins of five and ten centavos are 
disappearing because they're worth more as melted metal than as money. 

Montevideo 27 August 1965 

One of Holman's last requests to the Minister of the Interior, Adolfo Tejera, 
was to find a way to expel the North Korean trade mission that has been here for 
almost a year. I have followed up with queries to the police on the Koreans but 
without adequate reply. As an enticement to cooperate I've taken the unusual step 
of obtaining support from the Miami station, and perhaps others, in order to 
follow the movements of an aircraft that loaded up in Miami with transistor 



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radios and television sets for smuggling into Uruguay. Information on this 
contraband ring was obtained by the police through the AVENGEFUL telephone- 
tapping operation, but Colonel Ramirez, Chief of the Metropolitan Guard, asked 
me if the aircraft's movements in Miami could be watched. Ramirez and his 
colleagues were anxious to snare this shipment because under the law they get 
the value of all contraband they seize. The Miami station advised when it left, as 
did Panama, Lima and Santiago where technical stops were made. A few nights 
ago the aircraft made a secret landing on an interior airfield, unloaded arid took 
off again. The Metropolitan Guard, however, intercepted the two truckloads of 
television sets and transistor radios — initial value is set at 1 0 million pesos. Still 
no action on the Koreans but we will remind the police chief on our next visit; he 
doesn't often get such valuable help as we have just given him. 

Uruguayan Air Force Base No 1 has just been the scene of the delivery of the 
first of eight new aircraft as part of our military aid programme. Ambassador 
Hoyt made the presentation to the Uruguayan delegation composed of the 
Minister of Defense, Commanding General of the Air Force, Chief of Staff and 
other dignitaries. In his speech the Ambassador recalled that that day was the 
fourth anniversary of the signing of the Charter of Punta del Este beginning the 
Alliance for Progress. He cited President Johnson's declaration that the Alliance 
for Progress constitutes a change not only in the history of the free world but also 
in the long history of liberty. After the Dominican invasion one has to wonder. 
The photographs in the press yesterday show the Ambassador, the Minister and 
the others — they practically block from view the little four-seat Cessna that was 
the object of the ceremony. 

Montevideo 10 September 1965 

Strike activity is in full swing again after more than a month of relative calm. 
The financing mission is back from New York. They got only 55 million dollars, 
enough to pay the 38 million dollars already overdue, but gold will have to be 
shipped as collateral. New credit will be needed soon, however, in order to 
prevent the Bank of the Republic from defaulting again, and conditions imposed 
by the IMF will surely include cutbacks on internal spending such as salaries to 
government employees and subsidies. There is much pessimism, with general 
agreement that even harder times lie ahead. The peso is down to 68. 



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Internal struggle among the Blancos has paralysed the naming of the new 
board of directors of the Bank of the Republic. So much so that yesterday the 
Minister and Sub-Secretary of the Treasury resigned — only to withdraw their 
irrevocable resignations today At issue is which Blanco factions will get seats on 
the board of directors. Rationing of electricity continues although the drought 
earlier this year has now turned to serious flooding and hundreds of families have 
had to be evacuated along the Uruguay river. We're also in the midst of a rabies 
epidemic - a disease believed to have been eradicated from Uruguay several 
years ago. In the past year some 4000 people have been bitten by dogs in 
Montevideo even though 10,000 stray dogs were picked up. Malaise everywhere. 

New rumblings from Brazil and Argentina on possible intervention in 
Uruguay have provoked sharp reaction. During Brazilian Army Week the 
Minister of War made a public statement widely publicized here which praised 
the historic mission of the Brazilian Army: 'defense of democratic institutions, 
not only within our frontiers but also in whatever part of America we believe 
menaced by international communism'. A few days later the Argentine Army 
Commander, General Juan Carlos Ongania, said on returning from a trip to Brazil 
that the Argentine and Brazilian armies have jointly agreed to combat 
communism in South America, particularly of that of Cuban origin. Although he 
did not mention Uruguay by name his statement comes at a time of continuing 
public comment in Argentina and Brazil over economic and social problems in 
Uruguay. Ongania later denied the press version of his speech, but here the 
original version sticks. Protests by Uruguayan military officers have caused 
cancellation of an invitation to the Brazilian military commander of the border 
zone, while the Uruguayan Navy has withdrawn from joint exercises with US 
and Argentine units. A conference to have been given in Montevideo by an 
Argentine military leader was also boycotted by Uruguayan officers. The Foreign 
Ministry, moreover, has issued a statement in the name of the NCG rejecting any 
tutelary role in Uruguay by foreign-armed forces. 

I can't seem to avoid getting sucked further into Soviet operations. Besides 
Borisov (whom I continue to see occasionally) and Semenov (a First Secretary 
whose intelligence affiliation, if any, is unknown) and the Commercial Office 
chauffeur, we have a new lead involving the new KGB chief, Khalturin. Through 
AVENGEFUL we learned that Khalturin was searching for an apartment — any 
Soviet who lives outside the community compounds is surely an intelligence 
officer because all the rest must live under controlled circumstances. The 



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apartment Khalturin wanted is owned by Carlos Salguero, J the head of Latin 
American sales for the Philip Morris Co. and a naturalized American of 
Colombian origin. Salguero lives in a large mansion in Carrasco where he moved 
with his family just before I took over his previous house. Salguero's apartment, 
which is an investment property, is located in a modern building overlooking the 
beach in Pocitos. Conolly asked me to speak to Salguero about the possibility of 
obtaining access to his apartment before Khalturin moved in. 

Khalturin took the apartment, and at a 'recruitment luncheon' at the golf-club, 
Salguero agreed to give us access prior to Khalturin's moving in. I turned 
Salguero over to Conolly, the Soviet operations officer, who will organize the 
audio installation with Frank Sheroo, the technician stationed in Buenos Aires. 

One reason for this audio operation is that Khalturin seems to be having a 
love-affair with Nina Borisova, the wife of my friend the Consul — also a KGB 
officer. Borisova works in the Embassy, possibly with classified documents, and 
might have interesting discussions with Khalturin if he takes her to the 
apartment. So far Khalturin's wife hasn't arrived although he has said on the 
telephone that he expects her soon. There is also a chance that Khalturin might 
use the apartment for entertainment of prospective agents or even for agent 
meetings. 

Montevideo 23 September 1965 

Strikes intensifying: municipal workers, state banks, autonomous agencies 
and decentralized services. Yesterday the Blanco NCG Councillors and Directors 
of state enterprises decided to use police to eject employees of the state banks 
which have been paralysed by work to rule for the past ten days. Any employees 
who fail to respond to calls to work will be dismissed — harsh measures by 
Uruguayan standards. Today work to rule continues but the Bank of the Republic 
and the State Mortgage Bank closed in lock-outs, while workers in the private 
banks are stopping for thirty minutes in the morning and thirty in the afternoon in 
solidarity with the state bank employees. 

Blanco NCG Councillors and Directors of state enterprises meeting today 
decided to grant only 25 per cent increases for workers in all the autonomous 
agencies and decentralized services and without negotiations. Unions, however, 
persist in demanding 48 per cent increases for 1966, citing the government's own 
statistics for January- August inflation: 33.8 per cent. Blanco leaders are 



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determined to hold the line, however, because of the critical need for IMF 
backing. This will require suppressing the bank workers, who also opened the 
floodgates for overall government salary increases at this time last year. 

There are no signs of relenting on the union side. The peso is now down to 
74. The Minister and Sub-Secretary of the Treasury resigned again, this time 
accepted by the NCG. 

The 20 September resolution by the House of Representatives in Washington 
is causing an outrage here and in other parts of Latin America. The resolution 
attributes to the US or any other American state the right to unilateral military 
intervention in other American states if necessary to keep communism out of the 
Western Hemisphere. Here the resolution is viewed as an encouragement to the 
interventionist-minded in Brazil and Argentina. If this resolution is meant to be a 
show of support for the Dominican invasion, as it seems to be, I can only wonder 
how so many US political leaders could have been convinced that fifty-eight 
trained communists took over the Bosch movement. 

Montevideo 27 September 1965 

We've had a visit from John Hart, the new Deputy Chief of WH Division for 
Cuban Affairs. He's a former Chief of Station in Bangkok and in Rabat and is an 
old friend of Horton's. As the officer in' charge of operations against the Cubans I 
spent a lot of time with him briefing him on our operations and listening to his 
plea for more work against the Cubans. 

Hart said that the Agency has practically no agent sources reporting from 
inside Cuba (although technical coverage through electronic collection and aerial 
surveillance is adequate) and he is pushing recruitment of agents by mail. The 
system is to monitor mail from Cuba very closely in order to watch for signs of 
discontent. If records at headquarters and the JMWAVE station in Miami do not 
rule out the disaffected writer as a prospective agent, the station concerned or 
another WH station can write back a letter on an innocuous subject to the Cuban, 
with instructions to save the letter. If the Cuban replies to the given 
accommodation address, a second letter will be written instructing him how to 
develop secret writing contained on the first letter. The developed message will 
be a recruitment proposal and, if answered, secret-writing carbon sheets can be 
sent to the Cuban and regular correspondence established. Here in Montevideo 



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we would use the AVIDITY intercept operation to monitor mail for possible 
agents. 

Although I nodded politely and tried to show enthusiasm for this search for 
needles in a haystack, I thought to myself that this man must be mad to think we 
have time for such games. I can scarcely make a quick scan of letters from Cuba, 
much less begin a recruitment campaign with all that implies. 

Hart's other pet project is to find Che Guevara. Guevara disappeared about 
six months ago and although there were signs of him in Africa nobody knows 
where he is right now. Hart thinks he may be in a hospital in the Soviet Union 
with a mental breakdown caused by spoilage of asthma medicine kept 
unrefrigerated. He asked us to watch passenger lists closely and promised to send 
a photograph now being prepared of how Guevara would look without his beard 
— an artist's conception because no photos of a beardless Guevara have been 
found. Hart also asked that we continue the campaign already underway to 
generate unfavourable press speculation over Guevara's disappearance, in the 
hope that he'll reappear to end it. Other stations are doing the same. 

Hart's visit came at an opportune time for me because he liked the work I'm 
doing against the Cubans and in six months I'm going to be looking for a job in 
headquarters, if indeed I don't resign from the Agency. Right now I'm not sure 
exactly what I'll do but I told Horton that I plan to return to headquarters in 
March when my two years here are finished. 

There are two problems, I suppose, and each seems to reinforce the other. At 
home the situation is worse than ever: no common interests except the children, 
no conversation, increasing resentment at being trapped in loneliness. I told Janet 
that I'm leaving when we get back to Washington — she seems not to believe me 
— and in fact would have insisted that she return some time ago but for being 
separated from the children which is a prospect I can't accept. This is a hellish 
situation and no good for anyone. 

The other problem is even worse. The Dominican invasion started me 
thinking about what we are really doing here in Latin America. On the one hand 
the spread of the Cuban revolution has been stopped and the counter-insurgency 
programmes are successful in most places. Communist subversion at least is 
being controlled. But the other side, the positive side of reforming the injustices 
that make communism attractive, just isn't making progress. Here the problem is 
a small number of landholders who produce for export and whose interests clash 
with those of most of the rest of the country. Until Uruguay has a land reform 



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there can be no fair distribution of either the benefits or the burdens of the 
country's production. There will be no encouragement to the landholders to 
produce and export legally. Even if export prices were to rise dramatically the 
benefits would mostly go to the same handful of people who have the land — the 
same handful who are suffering the least during these hard times. For certain the 
landholders will resist, here as in other countries, but somehow the Alliance for 
Progress will have to stimulate land reform if other reforms are to be successful. 

The more I think about the Dominican invasion the more I wonder whether 
the politicians in Washington really want to see reforms in Latin America. Maybe 
participation by the communists wouldn't be such a bad thing because that way 
they could be controlled better. But to think that fifty-eight trained communists 
participating in a popular movement for liberal reform can take control is to show 
so little confidence in reform itself. The worst of this is that the more we work to 
build up the security forces like the police and military, particularly the 
intelligence services, the less urgency, it seems, attaches to the reforms. What's 
the benefit in eliminating subversion if the injustices continue? 1 don't think the 
Alliance for Progress is working, and I think I may not have chosen the right 
career after all. 

I'll need to keep working when I separate from Janet after we return to 
Washington because she'll need money for the children and she probably won't 
want to work. The object would be to find another job without a period of 
seriously reduced income or none at all. I told Hart I'd like to work in Cuban 
affairs when I get back. Maybe Riefe's kind of cynicism is the best way to stay 
with the Agency and assuage one's conscience. 

Montevideo 1 October 1965 

The bugging of Khalturiri's apartment was successful — transmitters inside 
the bed and inside a sofa. The batteries will last for six months or more because 
the transmitters have radio-operated switches. Now Conolly must find a listening 
post close enough for operating the switches and for recording. Then an L p 
operator and a transcriber. These audio operations are messy. 



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Montevideo 3 October 1965 

Strikes by the government employees, particularly the bank workers, 
continue and there are strong rumours circulating that the government is going to 
declare a state of siege in order to break the strikes. So far the only government 
action has been lock-outs at the banks and threats to impose economic sanctions 
against any employees engaging in new strikes. However, the unions of the 
autonomous agencies and decentralized services, which just completed a two-day 
walk-out, have announced a three-day walk-out for 13-15 October. 

Colonel Ventura Rodriguez, J Chief of the Montevideo Police and the 
country's top security official, had gone to Miami for the US police chiefs' 
convention, but he was recalled suddenly. Although the reasons for his recall 
were not related to the current strikes, his return created new rumours. 
Nevertheless, he told us that the decision on a state of siege hasn't yet been made. 
Headquarters is getting nervous and has asked for continuous reporting on the 
situation. 

In Peru the state of siege was finally lifted. The MIR guerrilla movement is 
defeated and only mopping up remains. A recent visitor who went through Lima 
told me that the station there opened an outpost in the mountain village where the 
Peruvian military command had been set up. During the crucial months of July- 
September the outpost served for intelligence collection on successes and failures 
of the military campaign and for passing intelligence to the Peruvian military 
obtained from Lima station sources. During the roll-up of the MIR urban 
organization, the main penetration agent, Enrique Amaya Quintana, J was 
arrested and during police interrogation he revealed his work for us. Eventually 
the station got him released and now he's been resettled in Mexico with, I'm sure, 
a generous retirement bonus. 

Suppression of the MIR will be regarded as a classic case of counter- 
insurgency effectiveness when good intelligence is collected during the crucial 
period of organization and training prior to commencement of guerrilla 
operations. Given their large numbers and training in Cuba, suppression would 
have been difficult and lengthy without a penetration agent like Amaya. 



Montevideo 7 October 1965 



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This afternoon the NCG voted to enact a state of siege (six Blancos in favour, 
three Colorados opposed) which in Uruguayan law is called 'prompt security 
measures'. Adolfo Tejera, the Minister of the Interior, made the proposal which 
he justified on the need to end labour unrest. The decree prohibits all strikes and 
all meetings for the promotion of strikes and related propaganda. Enforcement of 
the state of siege was given to the Ministers of I the Interior and Defense. 

This had in fact been decided secretly yesterday, because the whole country 
is on strike, in the government banks, judiciary and other key areas — the main 
issues being salaries, inflation, sanctions, fringe benefits. The police and Army 
have been paid their September salaries in preparation for action. Colonel 
Ventura Rodriguez, who had gone to the US police chiefs' convention in Miami, 
has been recalled, and Commissioner Otero and Inspector Piriz have been to tell 
me that the police have been some days at the ready. Headquarters wants daily 
reports on strikes and violence while the siege is on. 

Nobody was surprised — yesterday's 'secret' decision by the Blancos was in 
this morning's newspapers — but the CNT went ahead with its plans for a street 
rally and march this afternoon from the Legislative Palace to Independence 
Plaza. At the moment of the NCG voting the demonstrators were massed in the 
Plaza in front of the NCG offices, but as soon as the vote was taken police moved 
in to break up the demonstration. So far tonight thirty-four workers have been 
arrested, all from the electric company, except two who are leaders of the bank 
employees' union. 

Montevideo 8 October 1965 

Arrests have risen to over one hundred but practically all the important union 
leaders are in hiding. This afternoon sit-down strikes in the government banks 
continued but ejections and arrests followed. Lightning street demonstrations 
against the state of siege have been occurring in different parts of the city. 

As required by the Constitution the decree imposing the state of siege was 
sent to the Legislature for approval. The Blancos, however, knowing that the 
Colorados and splinter groups will try to repeal it, are staying away in order to 
prevent a quorum. 



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The CNT has called a general strike for 13 October and the autonomous 
agencies and decentralized services will begin that day a three-day walk-out. The 
government is in trouble. 

Montevideo 15 October 1965 

The police are no match for the well-organized unions. The general strike 
was a big success with over 200,000 government workers and most of the private 
organized workers out. Newspapers, public transport, wool, textiles, public 
health, schools, practically every activity stopped. Today is the last of the three- 
day strike in the autonomous agencies and decentralized services. Lightning 
street demonstrations have been frequent with much pro-strike wall-painting and 
hand bill distribution. 

Police have made several hundred more arrests but the important leaders are 
still free. The PCU radio outlet, Radio Nacional, was closed for seventy-two 
hours for broadcasting strike news while an entire issue of Epoca, a leftist daily 
newspaper, was confiscated yesterday. In protest, however, the press association 
and press unions struck again and no newspapers appeared today. Tejera % has 
publicly blamed the communist leadership of the government employees' unions 
for the state of unrest, and Blanco leaders are hardening. The directors of the four 
government banks announced the firing of eighteen employees for strike 
leadership, while the autonomous agencies and decentralized services have 
announced sanctions of wage discounts equalling two days for the first day of the